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The common stock of marielle machinery will generate the

The common stock of Marielle Machinery will generate the following payoffs to investors next year:

	Dividend	Stock Price
Boom	$8	$240
Normal	4	90
Recession	0	0

The common stock of Escapist Films will generate the following payoffs to investors next year:

	Dividend	Stock Price
Boom	$0	$18
Normal	1	26
Recession	3	34

Marielle Machinery and Escapist Films stocks are selling today for $90 and $30 a share, respectively. Calculate the expected rate of return and standard deviation of returns for both companies. Then calculate the expected return and standard deviation of a portfolio half invested in Marielle Machinery and half invested in Escapist Films.

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