Question: Given the following information, what is the expected return on a portfolio that is invested 35 percent in Stock A, 45 percent in Stock B,

Given the following information, what is the expected return on a portfolio that is invested 35 percent in Stock A, 45 percent in Stock B, and the balance in Stock C? State of Economy Probability of State Occurring Rate of Return if State Occurs:

Stock A (%) Stock B (%) Stock C (%)

Boom .12 16.7 18.9 4.6

Normal .85 14.2 14.1 9.5

Recession .03 4.6 3.8 11.2

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