The stock of Blue Water Tours, Inc. is expected to return 16.00 percent in a boom economy, 11.00 percent in a normal economy, and lose 10.00 percent in a recessionary economy. What is the expected rate of return on this stock if there is a 8.00 percent chance the economy booms, and an 83.00 percent chance the economy will be normal?

8.34 percent

9.51 percent

9.99 percent

9.26 percent

A stock is expected to earn 36 percent in a boom economy, 20.00 percent in a normal economy, and lose 20 percent in a recessionary economy. There is a 16 percent chance the economy will boom and a 60 percent chance the economy will be normal. What is the expected risk premium for this stock if the risk-free rate is expected to be 5.40 percent?

7.27 percent

6.16 percent

6.60 percent

7.56 percent

Lester has a portfolio comprised of the following stocks:

Stock	Number of Shares	Price per Share
A	500	$	13
B	200		28
C	800		26
D	400		15

What is the portfolio weight of Stock C?

53.47 percent

51.09 percent

56.48 percent

50.28 percent

A portfolio consists of 30 percent Stock A, 60 percent Stock B, and 10 percent Stock C. What is the portfolio expected return given the following:

State of Economy	Probability of State of Economy	Stock A Returns	Stock B Returns	Stock C Returns
Normal	0.60	22%	15%	38%
Recession	0.40