Use the following scenario analysis for stocks Z and Y.|Bear Market|Normal Market|Bull Market |Probability|0.2|0.5|0.3 |Stock X|-20%|18%|50% |Stock Y|-15%|20%|10% a) What are the expected rates of return for stocks X and Y? b) What are the standard dev

a) The expected rate of return for stock X is calculated as (0.2*-20%) + (0.5*18%) + (0.3*50%) = 20.4%. The expected rate of return for stock Y is calculated as (0.2*-15%) + (0.5*20%) + (0.3*10%) = 10.5%. b) The standard deviation of returns for stock X is calculated as the square root of [(0.2*(-20%-20.4%)^2 + 0.5*(18%-20.4%)^2 + 0.3*(50%-20.4%)^2)] = 28.85%. The standard deviation of returns for stock Y is calculated as the square root of [(0.2*(-15%-10.5%)^2 + 0.5*(20%-10.5%)^2 + 0.3*(10%-10.5%)^2)] = 12.35%. c) The expected return on the portfolio is calculated as (0.9*$90,000*20.4%) + (0.1*$10,000*10.5%) = $16,236.