Question
Given the following information, what is the expected return on a portfolio which is invested 40 percent in stock A and 60 percent in stock
Given the following information, what is the expected return on a portfolio which is invested 40 percent in stock A and 60 percent in stock B?
| State of economy | Probability of | Return if state occurs | |
|
| state of economy | Stock A | Stock B |
| Boom | 60% | 25% | 15% |
| Normal | 30% | 10% | 8% |
| Recession | 10% | -20% | -4% |
| 11.00% | ||
| 12.00% | ||
| 13.00% | ||
| 13.50% | ||
| 16.00% |
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Financial Trading And Investing
Authors: John Teall
3rd Edition
0323909558, 978-0323909556
