1compute the expected risk and returns of the portfolio

Question

The expected return and probability distribution of returns of assets X and Y are given below:

Economic State Pi Return (X) Return (Y)

1 0.1 25% 20%

2 0.3 20% 15%

3 0.2 15% 25%

4 0.4 10% 13%

Required:

1.Compute the expected risk and returns of the portfolio with 50% investment in asset X 2. Calculate the portfolio risk assuming that the correlation of the two assets X and Y are: 1.-1 2.0 3.+1 3.Draw a portfolio opportunity set curve. 4.What are the implications of portfolio theory?