The expected return from two stocks, Microsoft and Boeing, under different states of the economy are as

Question:

The expected return from two stocks, Microsoft and Boeing, under different states of the economy are as follows:

State of the economy – Poor, Average, Good,

Probability – Poor 20%, Average 40%, Good 40%

Microsoft – Poor 5%, Average 15%, Good 20%

Boeing – Poor −40%, Average 10%, Good 60%

(A) Find the expected return of Microsoft and of Boeing.

Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these...