Using the following information, calculate the expected return and standard deviation of a portfolio with 50 percent in ABC and 50 percent in DEF. Then calculate the expected return and standard deviation of a portfolio where you invest 40 percent in ABC, 40 percent in DEF, and the rest in T-bills with a return of 3.5 percent.

State of the Economy Probability ABC Stock Return (%) DEF Stock Return (%)

Depression 0.1 5 7

Recession 0.2 2 2

Normal 0.4 5 6

Boom 0.3 10 15