Smart Investor lives in a small country with only one publicly traded company, Supertech .

Smart Investor lives in a small country with only one publicly traded company, Supertech

.

This country had a functioning banking system and Smart Investor can borrow money from a

bank, or put money in a savings account. The interest rate is 6%. Smart Investor has $10,000

that he wants to invest for one year. Looking at historical data and studying the current prospects of Supertech, Smart Investor makes the following scenario: the rate of return on Supertech can be 20% with probability 0.3, 10% with probability 0.4, 0% with probability 0.2 and

-10% with probability 0.1.

i.

Compute the mean and

standard deviation of rate of return of Smart Investor's portfolio

for the following scenarios:

a)He invests his $10,000 in shares of Supertech

b)He puts $10,000 in a savings account

c)He invests half of his money in shares of Supertech and puts the other half in a savings account

d)He borrows $5,000 for a year from a bank and invests $15,000 in shares of Supertech

e)He borrows $20,000 dollars and invests $30,000 in shares of Supertech