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Question 1 Suppose financial analysts believe that there are four equally likely states of...

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Question 1 Suppose financial analysts believe that there are four equally likely states of the economy: depression, recession, normal, and boom. The returns on the Supertech Company are expected to follow the economy closely, while the returns on the Slowpoke Company are not. The return predictions are as follows: States of the economy Depression -20% 5% Recession 10% Normal 20% 30% -12% Boom 50% 9% i. 2. i. Required: For each company calculate: the expected returns the Variance the Standard deviation For each company calculate and explain: The covariance The correlation Assuming you are an investor with GHS100 available. If you invest GHS60 and GHS40 in Allos Inc. and Orangus Inc, respectively, what will be your portfolio returns? Calculate the Standard deviation of the portfolio. 3

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