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The expected return of the portfolio when is there is a 65% chance for the Boom scenario and a 35% chance for the Bust scenario and the portfolio is invested 35% in stock G and 65% in stock H is closest to: Stock G Stock H Boom Bust 14.15% 1.20% -3.70% 9.65%

The expected return of the portfolio when is there is a 65% chance for the Boom scenario and a 35% chance for the Bust scenario and the portfolio is invested 35% in stock G and 65% in stock H is closest to: Stock G Stock H Boom Bust 14.15% 1.20% -3.70% 9.65%

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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The expected return of the portfolio when there is a 65% chance for the Boom scenario and a 35% chance for the Bust scenario, and the portfolio is invested 35% in stock G and 65% in stock H, is closest to: **Table: Expected Returns for Stocks G and H** | Scenario | Stock G | Stock H | |----------|---------|---------| | Boom | 14.15% | 1.20% | | Bust | -3.70% | 9.65% | This table outlines the expected returns for two different stocks, G and H, under two economic scenarios, "Boom" and "Bust." - **Stock G** shows a 14.15% return during the Boom and a -3.70% return during the Bust. - **Stock H** shows a 1.20% return during the Boom and a 9.65% return during the Bust. The objective is to calculate the expected return based on the weighted investment in both stocks and the probability of each economic scenario.
Transcribed Image Text:The expected return of the portfolio when there is a 65% chance for the Boom scenario and a 35% chance for the Bust scenario, and the portfolio is invested 35% in stock G and 65% in stock H, is closest to: **Table: Expected Returns for Stocks G and H** | Scenario | Stock G | Stock H | |----------|---------|---------| | Boom | 14.15% | 1.20% | | Bust | -3.70% | 9.65% | This table outlines the expected returns for two different stocks, G and H, under two economic scenarios, "Boom" and "Bust." - **Stock G** shows a 14.15% return during the Boom and a -3.70% return during the Bust. - **Stock H** shows a 1.20% return during the Boom and a 9.65% return during the Bust. The objective is to calculate the expected return based on the weighted investment in both stocks and the probability of each economic scenario.
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