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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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