State of the Economy Probability Stock P Stock Q
Boom .7 32% 18%
Recession .3 -14% -5%
What is the expected return of Stock P?
What is the expected return of Stock Q
What is the expected return of a portfolio 60 percent invested in Stock P and the remainder in Stock Q?
What is the standard deviation of a portfolio 60 percent invested in Stock P and the remainder in Stock Q?