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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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