USE EXCEL FORMULAS

You have $100,000 to invest. You invest $25,000 in Stock A and $75,000 in stock B. You believe that there are two possible states of the world. The good state has a 40% probability of occurring and the bad state that has a 60% probability of occurring. Stock A's return in the good state will be 5% and stock A's return in the bad state will be -15%. Stock B's return in the good stare will be 25% and stock B's return in the bad state will be -10%. What is the expected return on the portfolio? 14.00% 12.00% 4.75% 4.25%