QUESTION 4 Use the information provided below to answer the questions that follow: ECONOMIC CONDITIONS PROBABILITY RATE OF RETURN Strong Economy, No Inflation 0.25 0.19 Weak Economy, High Inflation 0.05 0.03 No major change to the economy 0.70 0.12 4.1 4.2 4.3 Calculate the expected rate of return for the scenario that is presented in the information above. Explain the relationship between probability and risk. What if the possibility of the economy being weak were increased from 5% to 25%, and the possibility of the economy strengthening were to reduce from 25% to 5%? What would be the expected return in this case? Support your answer with a calculation. Calculate the variance by using the data that is presented above. Calculate the standard deviation from the variance in question 4.4 above. 4.4 4.5