10. State of economy Probability of state of economy Rate of Return on stock if state occurs Stock A Stock B Boom Normal Recession 0.30 0.40 0.30 100% 15% -70% 20% 15% 10% If you have a portfolio comprises 50% of stock A and 50% on stock B what is the expected return on this portfolio; * (2 points) 15% 13 % 14.4% 12 %