Suppose your expectations for the economy are as shown in the box. The last column in the table reports the returns to your portfolio in each each of the 3 scenarios. Which of the formulas listed below correctly represent the expected return to your portfolio? State of Economy Boom Normal growth Recession Scenarios (states) 1 2 3 Probability of each state .25 .50 .25 Returns 44% 14% -16% Possible Answers A - F: (A) E[r]= (0.25 +0.44) + (0.5 * 0.14) + (0.25 * (-0.16)) (B) E[r]= (1 0.25 0.44) + (2* 0.5 * 0.14)+(3+0.25 * (-0.16)) * * (C) E[r]= (1 * 0.44) + (2 * 0.14) + (3 * (-0.16)) (D) E[r]= (0.44+0.14-0.16) 3 ((0.25*0.44)+(0.50*0.14)-(0.25*0.16)) (E) E [T] = 3 (F) E[r]= (0.25 0.44) + (0.5*0.14) + (0.25 (-0.16))

Suppose your expectations for the economy are as shown in the box. The last column in the table reports the returns to your portfolio in each each of the 3 scenarios. Which of the formulas listed below correctly represent the expected return to your portfolio? Possible Answers A-F: (A) E[r]=(0.250.44)2+(0.50.14)2+(0.25(0.16))2 (B) E[r]=(10.250.44)+(20.50.14)+(30.25(0.16)) (C) E[r]=(10.44)+(20.14)+(3(0.16)) (D) E[r]=3(0.44+0.140.16) (E) E[r]=3((0.250.44)+(0.500.14)(0.250.16)) (F) E[r]=(0.250.44)+(0.50.14)+(0.25(0.16))