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The economys probability of boom is 50%, the probability of normal is 30%, and the probability of a recession is 20%. Stock A is expected
The economys probability of boom is 50%, the probability of normal is 30%, and the probability of a recession is 20%. Stock A is expected to return 30% in a boom, 20% in a normal economy, and -5% in a recession. Stock B should return 20% in a boom, 10% in a normal economy, and 5% in a recession. Stock C is expected to return 14% in a boom, 22% in a normal economy, and 12% in a recession. Assume you invest $4,000 in stock A, $3,000 in stock B, and $3,000 in stock C.
What is the expected return of this portfolio, in percentage?
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