Question: Suppose there are three states of the economy: boom, moderate growth, and recession and the annual return of GM and Ford stock in each state of the economy is as follows:

1. Calculate the mean, standard deviation, and variance of the annual return for each stock assuming the probabilities of the three states are 1/4 for boom, 1/4 for moderate growth, and 1/2 for recession. Place your results in the table below.
   
2. Calculate the covariance and correlation between the annual return on GM and Ford stocks assuming the probabilities of the three states of the economy are 1/4 for boom, 1/4 for moderate growth, and 1/2 for recession. Place your results in the table below.

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