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Here are the three scenarios of the state of the economy in acountry A: State of Economy Probability Boom 0.2 Normal 0.6Recession 0.2 Suppose the rates of return of the bond in threescenarios of the economy are 10% in a boom, 5% in a normal period,and -5% in a recession. The stock returns in the three scenariosare 20%, 10%, and -10%, respectively. Asset Allocation(Two-risky-assets Portfolio) Questions: 1. Compute the covariancebetween the two risky assets. 2. Compute the correlationcoefficient and explain the correlation between these two riskyassets. The Three Rules of Two-Risky-Assets Portfolio Based on theresults of Question 1 and Question 2. If an investor plans toinvest into a risky portfolio P which is composed of the stock andthe bond, and he allocates 40% into the stock and the rest 60% intothe bond. Apply Rules of Two-Risky-Assets Portfolio and compute: 3.The Expected Return of the risky portfolio P. 4. The Variance ofthe risky portfolio P.