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The following table presents forecasted returns for three companies under various potential states of the economy: State Probability Stock X Stock Y Stock Z Above
The following table presents forecasted returns for three companies under various potential states of the economy:
State | Probability | Stock X | Stock Y | Stock Z |
Above Average | 10% | 37.2% | 26.5% | 44.2% |
Average | 45% | 18.9% | 7.9% | 13.7% |
Below Average | 30% | -2.8% | -4.0% | -7.0% |
Recession | 15% | -11.7% | -6.0% | -15.5% |
Weight | 55% | 30% | 15% |
What is the expected return on a portfolio of these three companies constructed according to the weights given in the table? (Report answer in percentage terms and round to 2 decimal places. Do not round intermediate calculations).
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