There is a 34.14% probability of an average economy and a 65.86% probability of an above...

 

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There is a 34.14% probability of an average economy and a 65.86% probability of an above average economy. You invest 26.12% of your money in Stock S and 73.88% of your money in Stock T. In an average economy the expected returns for Stock S and Stock T are 13.69% and 11.03%, respectively. In an above average economy the the expected returns for Stock S and T are 17.52% and 33.43%, respectively. What is the expected return for this two stock portfolio? There is a 34.14% probability of an average economy and a 65.86% probability of an above average economy. You invest 26.12% of your money in Stock S and 73.88% of your money in Stock T. In an average economy the expected returns for Stock S and Stock T are 13.69% and 11.03%, respectively. In an above average economy the the expected returns for Stock S and T are 17.52% and 33.43%, respectively. What is the expected return for this two stock portfolio?

Answer rating: 100% (QA)

To calculate the expected return for the twostock portfolio we need to consider the probabilities an... View the full answer