Question

A portfolio consists of 50% invested in Stock X and 50% invested in Stock Y. We expect two probable states to occur in the future: boom or normal. The probability of each state and the return of each stock in each state are presented in the table below.

State	Probability of state	Return on Stock X	Return on Stock Y
Boom	30%	25%	35%
Normal	70%	10%	5%

What are the expected portfolio return and standard deviation?

Select one:

a. 14.25%; 10.63%

b. 14.25%; 10.31%

c. 18.75%; 11.25%

d. 14.25%; 6.68%

e. 18.75%; 12.12%

Answer 1