Hailey has identified two companies, Urban Foodies and Wicked Chef, as possible investments. She has estimated the expected performance of the two companies under each of the following economic conditions as follows: Economic conditions Probability of the economic state occurring Rate of return of Urban Foodies Rate of return of Wicked Chef Recession. 0,20 −15% 20% Normal 0,50 20% 30% Boom. 0,30 60% 40% You are required to calculate the expected return of a portfolio consisting of 75% of Urban Foodies and 25% of Wicked Chef. 1. 25,00% 2. 26,50% 3. 32,00% 4. 45,50%
Hailey has identified two companies, Urban Foodies and Wicked Chef, as possible investments. She has estimated the expected performance of the two companies under each of the following economic conditions as follows:
|
Economic conditions |
Probability of the economic state occurring |
|
Rate of return of Wicked Chef |
Recession. 0,20 −15% 20%
Normal 0,50 20% 30%
Boom. 0,30 60% 40%
You are required to calculate the expected return of a portfolio consisting of 75% of Urban Foodies and 25% of Wicked Chef.
1. 25,00%
2. 26,50%
3. 32,00%
4. 45,50%
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