Question: thanks for your help Question 1 Consider the following information: Rate of return Probability Stock A Stock B State of Economy Recession Normal 0.30 -40%

thanks for your help
 thanks for your help Question 1 Consider the following information: Rate

Question 1 Consider the following information: Rate of return Probability Stock A Stock B State of Economy Recession Normal 0.30 -40% 6% 0.50 18% 4% Boom 0.20 142% 2% [Note: take full decimal places in the middle steps and round your FINAL answer to 2 decimal places (i.e. $1.23 or 1.23%)] (a) Calculate the expected return for the two Stocks A and B respectively. (in %) (b) Calculate the standard deviation for the two Stocks A and B respectively. (in %) (c) If you have $2 million to invest in a stock portfolio and your goal is to create a portfolio with an expected return of 16.92%, how much money will you invest in Stock A and Stock B respectively? (d) Based on your answer in part (c), calculate the standard deviation for the portfolio. (in %) (e) If enough stocks (i.e. 100 randomly selected stocks) had been included in the portfolio, what happen to the standard deviation for the portfolio? Explain. (within 100 words)

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