A property analyst forecasts that the scenarios for the next year are (1) Boom, (2) Steady growth, (3) Sluggish, and (4) Recession.

Using scenario analysis, the property analyst has projected the expected returns of retail property will be as follows:

	State of the world
	Boom	Steady	Sluggish	Recession
Probability of state	0.1	0.5	0.2	0.2
Return on retail property	25%	10%	3%	-10%

The following value in this market is known:

Expected Return (Residential Property) = 4.5%

1.) Calculate the expected return of the retail property in this market? (must include workings and express answer as % with two decimal points)

2.) Calculate the expected return of a portfolio comprising 60% retail and 40% residential (must include workings and express answer as % with two decimal points)