Question
The following table reports forecasted returns for the stock of two different companies under three possible states of the economy: State Probability Stock A Stock
The following table reports forecasted returns for the stock of two different companies under three possible states of the economy:
| State | Probability | Stock A | Stock B |
| Expansion | 35% | 12.62% | 18.72% |
| Average | 55% | 7.05% | 5.37% |
| Recession | 10% | 0.91% | -6.98% |
What is the expected return on a portfolio that consists of 75% of funds allocated to Stock A and the rest in Stock B? (Report answer in percentage terms and round to 2 decimal places. Do not round intermediate calculations).
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Investments
Authors: Zvi Bodie, Alex Kane, Alan J. Marcus
9th Edition
73530700, 978-0073530703
