Each stocks expected return for the next year will depend on forecasted market conditions. The expected returns from the stocks in different market conditions are detailed in the following table:

Market Condition	Probability of	HDS	BSB
	Occurrence
Strong	20%	50%	70%
Normal	35%	30%	40%
Weak	45%	-40%	-50%

Calculate expected returns for the individual stocks in Megans portfolio as well as the expected rate of return of the entire portfolio over the three possible market conditions next year.

	The expected rate of return on Happy Dog Soaps stock over the next year is. a) 3.00 % b) 3.38% c) 2.50% d) 2.13%
	The expected rate of return on Black Sheep Broadcastings stock over the next year is. a)3.58% b) 6.82% c) 6.22% d) 5.50%
	The expected rate of return on Megans portfolio over the next year is. a) 3.25% b)4.39% c) 3.90% d) 2.76%

The expected returns for Megans portfolio were calculated based on three possible conditions in the market. Such conditions will vary from time to time, and for each condition there will be a specific outcome. These probabilities and outcomes can be represented in the form of a continuous probability distribution graph.