State of Economy Bust Boom State of Economy Probability of State of Economy 0.50 0.50 Bust Boom Calculate the expected return on a portfolio of 35 percent Roll and 65 percent Ross by filling in the following table: (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Probability of State of Economy Security Returns if State Occurs. 0.50 0.50 Roll -13% 31 Portfolio Return if State Occurs Ross 14% 7 % % E(RP)= Product % %

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Portfolio Management

Portfolio management is the process by which an investor decides that how the person will invest in a variety of assets in order to get a desired return in the future. A portfolio means a pool of assets that includes securities, bonds, and other investment instruments which helps in risk minimization of the money that has been invested. In other words, it can be said that a portfolio means a combination of assets in which an investor decides to invest their money in order to get a lump sum return in the future or even a series of cash flow that the person is expecting at the end of their job life.