Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You decided to invest money into a portfolio of two stocks, Snapchat and Groupon. There are two possibilities for what you can earn on

 

You decided to invest money into a portfolio of two stocks, Snapchat and Groupon. There are two possibilities for what you can earn on each of these two stocks next year, the so-called "thumbs up" state and the so-called "thumbs down" state. The details are in the table below: economy "Thumbs up" state State of the Probability of the state Snapchat stock's return in each Groupon stock's return in each of the economy state of the economy state of the economy "Thumbs down" state 70% Proportion of money invested into Snapchat stock = 25% 30% 41% Proportion of money invested into Groupon stock = 75% GROUPON 11% 11% 39% Calculate the expected return on your portfolio next year. Put your answer in percent but do NOT use the "%" sign, and round to TWO decimal places. For example, if you got 12.34%, type just 12.34.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

Expected Return Probability of Thumbs Up State Return in Thumbs Up State Probability of Thumbs Down ... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Personal Financial Planning

Authors: Randy Billingsley, Lawrence J. Gitman, Michael D. Joehnk

15th Edition

978-0357438480, 0357438485

More Books

Students also viewed these Finance questions