Calculate expected returns for the individual stocks in Jamess portfolio as well as the expected rate of return of the entire portfolio over the three possible market conditions next year.

The expected rate of return on CelestialCrane Cosmetic's stock over the next year is ____

The expected rate of return on Lumbering Ox Truckmaker's stock over the next year is ___

The expected rate of return on Jame's portfolio over the next year is ___

Remember, the expected value of a probability distribution is a statistical measure of the average (mean) value expected to occur during all possible circumstances. To compute an asset's expected return under a range of possible circumstances (or states of nature), multiply the anticipated return expected to result during each state of nature by its probability of occurrence. Consider the following case: James owns a two-stock portfolio that invests in Celestial Crane Cosmetics Company (CCC) and Lumbering Ox Truckmakers (LOT). Three-quarters of James's portfolio value consists of CCC's shares, and the balance consists of LOT's shares. Each stock's expected return for the next year will depend on forecasted market conditions. The expected returns from the stocks in different market conditions are detailed in the following table: Market Condition Probability of Occurrence Celestial Crane Cosmetics Lumbering Ox Truckmakers Strong 0.25 47.5% 66.5% Normal 0.45 28.5% 38% Weak 0.30 -38% -47.5% Calculate expected returns for the individual stocks in James's portfolio as well as the expected rate of return of the entire portfolio over the three possible market conditions next year