What is the expected return on a portfolio comprised of $4,000 in stock M and $6,000 in stock N if the economy enjoys a boom period?
A)6.4%
B)6.8%
C)10.4%
D)13.2%
E)14.0%

Question

What is the expected return on a portfolio comprised of $4,000 in stock M and $6,000 in stock N if the economy enjoys a boom period? 
A)6.4% 
B)6.8% 
C)10.4% 
D)13.2% 
E)14.0%

Quizplus · Accepted Answer

E(r)_Boom = [($4,000 F1F1F1S1F1F1F10 ($4,000 + $6,000)F1F1F1S1F1F1F10 .18] + [$6,000 F1F1F1S1F1F1F10 ($4,000 + $6,000)F1F1F1S1F1F1F10 .10] = .072 + .06 = .132 = 13.2%

What Is the Expected Return on a Portfolio Comprised of $4,000