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  3. 3. using the following table to answer parts a) to

3. Using the following table to answer parts a) to c). ...

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Accounting

3. Using the following table to answer parts a) to c).
Recession Normal Boom
Probability 0.10.60.3
Stock INV -10%18%25%
Stock DEV -20%20%40%
a) What are the expected rates of return for Stocks INV and DEV?
b) What are the standard deviations of returns on Stocks INV and DEV?
c) Assume you invest $8,000 in Stock INV and $2,000 in Stock DEV, what is the expected return on your portfolio?

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