1. Compute the returns Expected rate of return=Probability X Rate of return 6 portfolios of 5 stocks = 3 portfolios of 10 stocks = 2 portfolios of 15 stocks= 1 portfolio of 30 stocks = Expected Return = (30+30+30+30) = 120/100 Expected Return = (30+30+30+30) = 120/100 Expected Return = 1.2% 5*6 = 30 10*3 = 30 15*2 = 30 30 * 1 = 30