use the following table of states of the economy and stock returns to answer the rev 557639

Use the following table of states of the economy and stock returns to answer the review problems:

Security Returns
if State Occurs

State of

Probability of State

Roten

Bradley

Economy

of Economy

Bust

0.4

10%

30%

Boom

0.6

40

10

1

1. Expected Returns Calculate the expected returns for Roten and Bradley.

2. Standard Deviations Calculate the standard deviations for Roten and Bradley.

3. Portfolio Expected Returns Calculate the expected return on a portfolio of 50 percent Roten and 50 percent Bradley.

4. Portfolio Volatility Calculate the volatility of a portfolio of 50 percent Roten and 50 percent Bradley.

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