Answer the following question:
Question 1: What are the expected returns for Stocks X and Y, E(rX) and E(rY)?
Question 2: What are the standard deviations of the returns for Stocks X and Y, X and? Y?
Question 3: Suppose you have $1000 to invest, and decide to invest $700 in Stock X and $300 in Stock Y. What are the expected return and standard deviation of the return on your portfolio, E(rP) and ?P?
Market Condition Probability Return on Stock X Return on Stock Y
Bear Market 0.3 -3% -5%
Normal Market 0.5 3% 5%
Bull Market 0.2 8% 15%
Explain in detail.