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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.
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