1. Calculate the expected return of the ABC company.

2. Calculate the expected return of the XYZ company.

3. If the expected return of WOW company was 12%, for LOL company was 15% and for HAH company is 21% and your portfolio was made up of WOW, LOL and HAH shares only, what would be the expected return, if equal weights were invested in the three shares?

The Moorebank Marble Company is looking to make some investment in some shares and other investments to diversify their portfolio. They are interested in the following two stocks and have been able to determine their expected returns based on the expected different states of the economy. State of Economy Probability ABC Company XYZ Company Expected Return Expected Return Very Good 0.2 30% 25% Good 0.5 16% 10% Average 0.2 10% 2% Poor 0.1 -10% -20%