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Given the following information: State of Economy Probability Rate of Return if State Occurs Stock G...

Given the following information:

State of Economy Probability Rate of Return if State Occurs Stock G Rate of Return if State Occurs Stock H
Boom 0.3 12% 25%
Normal 0.5 15% 10%
Recession 0.2 6% -18%

Suppose you hold a portfolio with 60% invested in G and 40% invested in H.

(1) What is the portfolio’s return if each state of the economy occurs, respectively?

(2) What is the portfolio’s expected return?

(3) What is the portfolio’s standard deviation?

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