Given the following information, what is the expected return on a portfolio that is invested 30 percent in both Stocks A and C, and 40 percent in Stock B?     State of economy         probability      A               B                 C Boom                              0.05             7.80%       23.60%       18.40 % Normal                            0.85              9.10%      15.40 %     13.70% Recession                         0.1             11.80%     -12.30%       6.40 % Weight of Stocks                                  30%           40%           30%   Please show your work.

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 14P
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Given the following information, what is the expected return on a portfolio that is invested 30 percent in both Stocks A and C, and 40 percent in Stock B?

 

 

State of economy         probability      A               B                 C

Boom                              0.05             7.80%       23.60%       18.40 %

Normal                            0.85              9.10%      15.40 %     13.70%

Recession                         0.1             11.80%     -12.30%       6.40 %

Weight of Stocks                                  30%           40%           30%

 

Please show your work.

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