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.

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 13P

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Question

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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