Question
Suppose you have $20,000 total. If you put $14,000 in Stock A and the remainder in Stock B, what will be the expected return on
Suppose you have $20,000 total. If you put $14,000 in Stock A and the remainder in Stock B, what will be the expected return on your portfolio?
| State of Economy | Probability | Return on A | Return on B |
| Recession | 0.2 | -20% | 30% |
| Normal | 0.5 | 10% | 20% |
| Boom | 0.3 | 70% | 50% |
| a. | 14.50% | |
| b. | 28.50% | |
| c. | 10.90% | |
| d. | 24.70% |
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Money Banking And Financial Markets
Authors: Stephen Cecchetti, Kermit Schoenholtz
3rd Edition
007337590X, 9780073375908
