The returns on shares S and T vary depending on the state of economic growth.

Required
a. Calculate the expected return and standard deviation for share S.
b. Calculate the expected return and standard deviation for share T.
c. What are the covariance and the correlation coefficient between returns on S and returns on T?
d. Determine a portfolio expected return and standard deviation if two-thirds of a fund are devoted to S and one-third devoted to T.

State of economy Probability of economic state occurring Returns on S if economic state occurs (%) Returns on T if economic state occurs (%) Boom Growth Recession 0.15 0.70 0.15 45 20 -10 18 17 16