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Stock AAA will have a return of 0% in a boom and 15% in a bust. Stock ZZZ will have a return of 24% in
Stock AAA will have a return of 0% in a boom and 15% in a bust. Stock ZZZ will have a return of 24% in a boom and -12% in a bust. The odds of a boom are 2/3 and the odds of a bust are 1/3, giving Stock AAA an expected return of 5% and Stock ZZZ an expected return of 12%. You put 57 percent of your overall investment in AAA and the remainder of your money in ZZZ. What is the expected return on your portfolio? Write your answer out to three decimals (for example, write 6.5% as .065)
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