Question: State Probability X Y Boom 0.25 15% 10% Normal 0.60 10% 9% Recession 0.15 5% 10% Calculate the expected return and the standard deviation for

State Probability X Y

Boom 0.25 15% 10%

Normal 0.60 10% 9%

Recession 0.15 5% 10%

  1. Calculate the expected return and the standard deviation for X and Y.
  2. What is the expected return and the standard deviation for a portfolio with an investment of $5,500 in asset X and $4,500 in asset y? Calculate portfolio weights, Wx and Wy first.

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