State of economy Probability of state of economy Rate of Return on stock if state occurs Stock A Stock B Boom 0.30 100% 20% Normal 0.40 15% 15% Recession 0.30 -70% 10% If you have a portfolio comprises 50% of stock A and 50% on stock B what is the expected return on this portfolio; (2 Points) 14.4% 13 % 12 % 15%