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?
A)11.97 percent
B)12.94 percent
C)13.33 percent
D)13.84 percent
E)14.42 percent

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? 
A)11.97 percent 
B)12.94 percent 
C)13.33 percent 
D)13.84 percent 
E)14.42 percent

Quizplus · Accepted Answer

E(R_Boom) = (0.30 × 0.078) + (0.40 × 0.236) + (0.30 × 0.184) = 0.1730E(R_Normal) = (0.30 × 0.091) + (0.40 × 0.154) + (0.30 × 0.137) = 0.1300E(R_Recession) = (0.30 × 0.118) + (0.40 × -0.123) + (0.30 × 0.064) = 0.0054E(R_Portfolio) = (0.05 × 0.1730) + (0.85 × 0.1300) + (0.10 × 0.0054) = 11.97 percent

Given the Following Information,what Is the Expected Return on a Portfolio