You decide to invest in a portfolio consisting of 40 percent Stock A, 40 percent Stock B, and the remainder in Stock C. Based on the following information, what is the expected return of your portfolio? State of Economy Probability of State Return if State Occurs of Economy Stock A Stock B Stock C Recession .18 - 18.6 % - 3.8 % - 22.7 % Normal .55 10.4 % 8.4 % 17.0 % Boom .27 28.4 % 15.7 % 31.6 %

You decide to invest in a portfolio consisting of 40 percent Stock A, 40 percent Stock B, and the remainder in Stock C. Based on the following information, what is the expected return of your portfolio? State of Economy Recession Normal Boom Probability of State of Economy .18 .55 .27 Return if State Occurs Stock A Stock B Stock C -18.6% - 3.8% -22.7% 10.4% 8.4% 17.08 28.4% 15.7% 31.6% Multiple Choice 12.95% O O 11.87% 10.05% O 10 500