Question: Consider the following probability distribution for stocks C and D: State Probability Expected Return Stock C Expected Return Stock D 1 .2 19% -9% 2

Consider the following probability distribution for stocks C and D:

State Probability Expected Return Stock C Expected Return Stock D
1 .2 19% -9%
2 .5 11% 14%
3 .2 -16% 26%
4 .1 -30% 40%

If you invest 25% of your money in C and 75% in D, what would be your portfolio's expected rate of return?

9.27%

14.40%

none of the answers are correct

5.93%

11.58%

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