Table below presents the state-based returns of securities A and B, the risk-free security and the...

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Finance

Table below presents the state-based returns of securities Aand B, the risk-free security and the market portfolio, wherepis the probability of each state. Use the informationtherein to answer parts aand b.
State
p
Security A
Security B
Risk-free security
Market portfolio
Recession
0.5
-4%
48%
2%
-6%
Normal
0.4
10%
-10%
2%
25%
Boom
0.1
30%
-30%
2%
30%
Calculate the expected return and its standard deviation ofsecurities A and B.
Suppose you borrow $20,000 at the risk-free rate and along withthe $40,000 you have, you invest $10,000 in security A and $50,000in security B. Calculate the expected return, its standarddeviation and CAPM-implied beta of this portfolio.

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Table below presents the state-based returns of securities Aand B, the risk-free security and the market portfolio, wherepis the probability of each state. Use the informationtherein to answer parts aand b.StatepSecurity ASecurity BRisk-free securityMarket portfolioRecession0.5-4%48%2%-6%Normal0.410%-10%2%25%Boom0.130%-30%2%30%Calculate the expected return and its standard deviation ofsecurities A and B.Suppose you borrow $20,000 at the risk-free rate and along withthe $40,000 you have, you invest $10,000 in security A and $50,000in security B. Calculate the expected return, its standarddeviation and CAPM-implied beta of this portfolio.

State	p	Security A	Security B	Risk-free security	Market portfolio
Recession	0.5	-4%	48%	2%	-6%
Normal	0.4	10%	-10%	2%	25%
Boom	0.1	30%	-30%	2%	30%