Question

Calculate the probability weighted expected return for each asset along with the probability weighted standard deviation...

Calculate the probability weighted expected return for each asset along with the probability weighted standard deviation for each asset using the information below. What is the market risk premium? Please show work so I can understand how answer was reached. Thanks.

State of Economy 1 2 3 4
Probability 0.13 0.4 0.3 0.17
T-bill 1.4% 1.5% 1.7% 1.6%
S&P 500 7.5% 9.41% 18.5% 14.17%

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