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State of Economy Probability of State 31.1 Consider the following information on a portfolio of three stocks: Rate of Return in Percent Stock A

  




State of Economy Probability of State 31.1 Consider the following information on a portfolio of three stocks: Rate of Return in Percent Stock A Stock B Stock C Occurring Portfolio Weights Boom Normal Bust .3 .6 .1 568 .5 .3 .2 14 23 12 16 7 2 -23 a. What is the expected return on Stock A b. What is the expected return on Stock B c. What is the expected return on Stock C d. What is the expected return on the portfolio in a boom? e. What is the expected return on the portfolio in a normal economy? f. What is the expected return on the portfolio in a bust? g. What is the overall expected return on the portfolio?

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