Suppose you have an equally-weighted portfolio consisting of two securities.  One is a corporate bond and the other is a share of stock in the Delta Corporation.  As of the beginning of the year, the bond has a coupon rate of 6%, matures 5 years from today and has a yield to maturity (YTM) of 4.73 percent.  The Delta stock pays a constant dividend of 95 cents per share which is expected to remain the same into the foreseeable future and is currently selling for $41.30.  Economists forecast there is a 40 percent chance the economy will go into a recession and a 60 percent chance it will improve slightly.  In the event the economy goes into a recession, analysts expect the bonds YTM to decline to 4 percent by year end.  The recession is expected to increase the current required return on Delta stock by 20%.  In the event the economy improves, analysts expect the bonds YTM to remain at 4.73 but the required return on the Delta stock is expected to decrease by 10%.

Compute the current price of both securities.
 
Construct a table showing the expected price of both securities under a recession and normal state of the economy.
 

Reconstruct the table in part b to show the expected return of both securities under a recession and normal state of the economy.
 

Compute the expected return you would earn on your portfolio over the year.

Will you earn the expected return you compute in part d above?  If not, then what return will you actually earn?