You implement a moderate aggressive strategy: investing 60% in stocks and 40% in bonds.

The possible annual returns of stocks and bonds are dependent on the market situations:

	Probability	Stock returns	Bond returns
Market is Up	0.65	20%	3%
Market is Down (Recessions)	0.35	-30%	5%

The column "probability" shows the "chance" that the market is up or down. For example, 65% indicates that there is 65% chance that the market is up.

Answer the following questions:

1. What is the expected return of the stock ? What is the expected return of the bond?

2. Based on your answers in Q1, what is the weighted average return of your portfolio? (hint: you invest 60% in stocks and 40% in bonds)?