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You have a portfolio that is comprised of 80 percent of stock A and 20 percent of stock B, see table below. What is the

You have a portfolio that is comprised of 80 percent of stock A and 20 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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