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You decide to invest in a portfolio consisting of 40 percent Stock A, 40 percent Stock...

You decide to invest in a portfolio consisting of 40 percent Stock A, 40 percent Stock B, and the remainder in Stock C. Based on the following information, what is the expected return of your portfolio?

State of Economy Probability of State Return if State Occurs of Economy

Stock A Stock B Stock

Recession    .23 - 17.0 % - 3.0 % - 21.9 %

Normal   .49     12.0 %   7.6 % 16.2 %

Boom .28 26.8 % 14.9 % 30.8 %

11.57%

8.98%

9.39%

10.61%

9.79%

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jeff jeffy answered 1 year ago
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