Question 3: Consider the following probability distribution for the return for stock X: State 1 Probability 0.3 2 0.5 3 0.2 a) What is the expected rate of return of stock X? Return on Stock X 8% 10% -12% (0.5 mark) b) What is the standard deviation of stock X? (0.5 mark) c) Another stock, Y, has an expected return of 8% and a standard deviation of 12%. Suppose that Linda wants to invest 40% of her money in stock X and the rest in stock Y. What is the expected return on Linda's portfolio? (1 mark) (1 mark) d) What is the risk (volatility) of Linda's portfolio if the correlation coefficient between the returns of stocks X and Y is 0.27