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 | Stock C |
| Expansion | 55% | 13.56% | 18.97% | 5.78% |
| Average | 45% | 8.11% | 5.97% | 3.27% |
What is the expected return on a portfolio that consists of 30% of funds allocated to Stock A, 40% allocated to Stock B, and the rest in Stock C?
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Principles Of Managerial Finance
Authors: Lawrence J. Gitman, Chad J. Zutter
13th Edition
9780132738729, 136119468, 132738724, 978-0136119463
