What Is the Expected Return on Portfolio Which Is Invested

question 100

Multiple Choice

What is the expected return on portfolio which is invested 20% in share A, 50% in share B, and 30% in share C?
$\begin{array} { | l | l | l | l | l | } \hline & & \multicolumn{3}{|l|} { \text { Rate of Return if State Occurs } } \\\hline \text { State of Economy } & \text { Probability of State of Economy } & \text { Share A } & \text { Share B } & \text { Share C } \\\hline \text { Boom } & 20 \% & 18 \% & 9 \% & 6 \% \\\hline \text { Normal } & 70 \% & 11 \% & 7 \% & 9 \% \\\hline \text { Recession } & 10 \% & - 10 \% & 4 \% & 13 \% \\\hline\end{array}$

• A)7.40%
• B)8.25%
• C)8.33%
• D)9.45%
• E)9.50%

---

Definitions:

Limited-Service

A business model where the service provider offers a narrowed or reduced range of services or products to its customers.

Self-Service

Business or retail models that allow customers to perform services independently without the need for direct service employee assistance.

Costco

A multinational corporation that operates a chain of membership-only warehouse clubs, known for selling bulk goods at low prices.

Franchise System

A method of distributing products or services involving a franchisor who establishes the brand’s trademark or business system and a franchisee who pays a royalty to do business under the franchisor's name.