Question
You have a portfolio that is comprised of 65 percent of stock A and 35 percent of stock B (See table below). What is the
You have a portfolio that is comprised of 65 percent of stock A and 35 percent of stock B (See table below). What is the expected rate of return on this portfolio?
| State of Economy | Probability of State of Economy | Rate of Return if State Occurs | |
|
|
| Stock A | Stock B |
| Boom | 0.15 | 17 % | 12 % |
| Normal | 0.65 | 10 % | 7 % |
| Recession | 0.20 | -21 % | 1 % |
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Introduction To Estimating Economic Models
Authors: Atsushi Maki
1st Edition
0415589878, 978-0415589871
