(CHAPTER 13)

Your two favorite companies are Firefox and Twitter. You feel like every year in the future will be randomly either a "thumbs up" year or a "thumbs down" year, which will determine how high the annual return on your stock investment into each of these companies' stock will be, as shown in the table below:

State of the economy	Probability of the state of the economy	Firefox	Twitter
"Thumbs up"	40%	Return=25%	Return=15%
"Thumbs down"	60%	Return=20%	Return=10%

(a) The Expected Return for Twitter's stock equals

CHOOSE FROM:

A:Twitter E[R] = 11.50% B:Twitter E[R] = 12.00% C:Twitter E[R] = 13.00% D: Twitter E[R] = 18.00% E:Twitter E[R] = 18.50% F: Portfolio E[R] = 15.00% G: Portfolio E[R] = 15.50% H: Portfolio E[R] = 16.00%Portfolio J: E[R] = 16.90%Portfolio K: E[R] = 17.40%.

(b) The Expected Return of a portfolio with 30% invested into Firefox stock and 70% invested into Twitter stock equals

CHOOSE FROM:

A:Twitter E[R] = 11.50% B:Twitter E[R] = 12.00% C:Twitter E[R] = 13.00% D: Twitter E[R] = 18.00% E:Twitter E[R] = 18.50% F: Portfolio E[R] = 15.00% G: Portfolio E[R] = 15.50% H: Portfolio E[R] = 16.00%Portfolio J: E[R] = 16.90%Portfolio K: E[R] = 17.40%.