a. What is the expected return of each asset? b. What is the variance and the standard deviation c. What is the expected return of a portfolio with 1 d. What is the portfolio's variance and standard de Data Table Hint Make sure to round all intermediate calculatio (Click on the following icon D in order to copy its contents into a spreadsheet.) a. What is the expected return of asset J? (Round to four decimal places.) Roturn on Return on Return on State of Economy Boom Probability of State Asset J in State Asset K in Stale Asset L in State 0.28 0.070 0.260 0.180 0.200 Growth 0.37 0.070 0.140 Stagnant 0.25 0.070 0.040 0.060 Recession 0.10 0.070 <-0.100 -0.210

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Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.