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1. Consider the following information on a portfolio of three stocks: State of Probability of Rate of Return in Percent Economy State Stock A Stock

1. Consider the following information on a portfolio of three stocks: State of Probability of Rate of Return in Percent Economy State Stock A Stock B Stock C Occurring Boom .05 8 17 27 Normal .80 8 10 18 Bust .15 5 2 -13 a. What is the expected return on Stock A b. What is the expected return on Stock B c. What is the expected return on Stock C The portfolio is invested 40 percent each in Stock A and Stock B, and 20 percent in Stock C. d. What is the expected return on the portfoiio in a boom? e. What is the expected return on the portfolio in a normal economy? f. What is the expected return on the portfolio in a bust? g. What is the overall expected return on the portfolio

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