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David owns a two - stock portfolio that invests in Blue Llama Mining Company ( BLM ) and Hungry Whale Electronics ( HWE ) .
David owns a twostock portfolio that invests in Blue Llama Mining Company BLM and Hungry Whale Electronics HWE Three
quarters of David's portfolio value consists of BLMs shares, and the balance consists of HWE'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:
Calculate expected returns for the individual stocks in David's 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 Blue Llama Mining's stock over the next year is
The expected rate of return on Hungry Whale Electronics's stock over the next year is
The expected rate of return on David's portfolio over the next year is
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