A portfolio consists of $15,000 in Stock M and $22,900 invested in Stock N. The expected return on these stocks is 8.80 percent and 12.40 percent, respectively. What is the expected return on the portfolio?

11.69%

10.22%

10.98% - Right Answer

10.60%

9.37%

Based on the following information, what is the expected return?

State of Economy	Probability of State		Return if State Occurs
	of Economy		Stock A
Recession		.28	- 10.60%
Normal		.31	12.10%
Boom		.41	21.40%

9.56%

12.53%

7.63%

8.60%

15.49%