1. What is the expected return on this portfolio under each state of economy (i.e. recession, normal, and expansion)?
2. What is the expected overall portfolio return? (Hint: Please consider the probabilities of each state of economy)
3. What is the risk (i.e. standard deviation) of this portfolio?
4. What are the expected returns on individual stocks (E(R)A, E(R)B, E(R)C, E(R)D)?
6. She wants to use the expected returns on individual stocks (E(R)A, E(R)B, E(R)C, E(R)D) in an equation to find the expected return on this portfolio. How does she do that? Will she find the same expected return here as she finds in #2?
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