Use the following table to answer questions 1 - 6:

State of Economy	Probability of State of Economy	Asset A Rate of Return	Asset B Rate of Return
Boom	0.4	0.13	0.08
Normal	0.5	0.06	0.05
Recession	0.1	-0.05	-0.01

1.What is the expected return of a portfolio that has 60% in Asset A and 40% in Asset B?

2.The standard deviation of the 60% A and 40% B portfolio most likely should

A)	Equal 60% X A's standard deviation plus 40% x B's standard deviation.

B)	Be greater than 60% X A's standard deviation plus 40% x B's standard deviation.

C)	Be less than 60% X A's standard deviation plus 40% x B's standard deviation.