Just question 8

7. A portfolio is expected to return 10 percent in a normal economy, 14 percent in a boom economy, and lose 4 percent in a recessionary economy. The probability of a boom is 20 percent and the probability of a recession is 10 percent. What is the expected return of the portfolio? (a)8.52% (b) 8.73% (c) 8.96% (d) 9.11% (e)9.40% 8. What is the variance of the expected return in the previous question? (a) 0.0017 (b) 0.0022 (c) 0.0028 (d) 0.0034 (e) 0.0041