The expected market return and risk for different assumptions about the state of the economy is shown below.

a. Compute the expected return and standard deviation. (Round your answers to 2 decimal places.)

State of Economy		Probability of State		Expected Market Return
Fast growth		0.15		39%
Slow growth		0.45		16%
No growth		0.22		7%
Recession		0.13		18%
Depression		0.05		37%

b. Compute the expected return and risk for the following 2 scenarios: (Round your answers to 2 decimal places.) Scenario 1:

State of Economy		Probability of State		Expected Market Return
Fast growth		0.10		34%
Slow growth		0.38		15%
No growth		0.29		3%
Recession		0.21		24%
Depression		0.02		36%

Scenario 2:

State of Economy		Probability of State		Expected Market Return
Fast growth		0.14		44%
Slow growth		0.27		16%
No growth		0.39		4%
Recession		0.16		22%
Depression		0.04		30%