1. You're combining two stocks: Theta and Vega to form an investment portfolio. You decide to invest...
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1. You're combining two stocks: Theta and Vega to form an investment portfolio. You decide to invest 60% of the portfolio in stock Theta, and 40% in stock Vega. The table below outlines the expected returns of each stock given 3 possible states of the economy. Given this information, what is your portfolio's expected return?
State of Economy | Probability of state | Returns on stock Theta | Return on stock Vega |
Good | 0.3 | 12% | -2% |
Average | 0.6 | 8% | 2% |
Poor | 0.1 | 4% | 6% |
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date: