Calculate the expected return, variance, and standard deviations for investments in either stock A or stock B, an equally weighted portfolio of both, and a portfolio of 75% A and 25% B. Explain which investment you recommend and why.
Scenerio Probability Return on A Return on B
Recession 25% -4% 9%
Normal 40% 8% 4%
Boom 35% 20% -4%