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Consider the following information on returns and probabilities: Invest 1/2 of your money in Asset A and 1/2 in Asset B. State Probability A B

Consider the following information on returns and probabilities:

Invest 1/2 of your money in Asset A and 1/2 in Asset B.

State Probability A B

Boom .25 12% 4%

Bust .75 6% 18%

What is the expected return for the portfolio in %?

		a. 1.7
		b. 2.9
		c. 3.9
		d. 4.6
		e. 5.5
		f. 6.9
		g. 7.5
		h. 9.0
		i. 8.2
		j. 11

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