Sophia is considering setting up an investment portfolio. She has $10,000 cash on hand and would like to spend $3758 on Share A and the remaining on Bond B. The market price for the share today is $29. She also has the following expectation on the share price and bond return in 6 months time. Assume no coupon or dividend is received during the period of holding.

Calculate the following variables in the formula above.

R₁₌

R₂=

Calculate the expected return of Bond B.

E(R)_{Bond B}=

Sophia wants to use the below formula to calculate the expected return of her portfolio.

Calculate the following variables in the formula above

x₁=

x₂=

Probability Share A Price Bond B Return 60% $35 -2% 40% $25 5%