Question: write the answer in 2-3 steps with clear hand writing or typed answer 4. Based on the following information Calculate State of Economy Probability of

write the answer in 2-3 steps with clear hand writing or typed answer

write the answer in 2-3 steps with clear hand

4. Based on the following information Calculate State of Economy Probability of State of Economy Rate of Return if State Occurs Stock A Stock B 0.20 0.05 -0.17 Recession Normal Boom 0.08 0.12 0.55 0.25 0.13 0.29 a) The expected return of Stock A b) The expected return of Stock B c) The expected return of Portfolio where you invest $35,000 in Stock A and $45,000 in Stock B d) Suppose Stock A has a beta of 0.8 and Stock B has a beta of 1.3. If you invest $35,000 in Stock A and $45,000 in Stock B, what is the beta of this portfolio? e) Expected return on the market (Rus) is 10% and the risk-free (r) is 4%. What must the the expected return on the portfolio according to CAPM? (Use the beta you have calculated in section d) for CAPM)

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