What Is the Expected Return of an Equally Weighted Portfolio

question 86

Multiple Choice

What is the expected return of an equally weighted portfolio comprised of the following three stocks? $$\begin{array} { l c c c r } \text { State of } &\text { Probability of }& { \text { Rate of Return } } \\ \text { Economy } & \text { State of Economy } & { \text { if State Occurs } } \\& & \begin{array}{ll} \text { Stock A } & \text { Stock B } & \text { Stock C } \end{array} \\\text { Boom } & .25 &\begin{array}{ccc} .19 \quad \quad \quad& .13 \quad \quad & .07 \quad \quad \end{array} \\\text { Nonnal } & .72 &\begin{array}{ccc} .15 \quad \quad & .05 \quad \quad & .13 \quad \quad \end{array} \\\text { Bust } & .03 & \begin{array}{ccc} - .29 \quad \quad & - .14 \quad \quad & .22 \quad \quad \end{array}\end{array}$$

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Definitions:

Total Cost

Total cost refers to the sum of all expenses incurred in producing a product or providing a service, including both fixed and variable costs.

Finishing Products

The final stages in the production process where goods are completed and made ready for sale.

Cost of Goods Manufactured

The total production cost of goods completed and ready for sale during a specific accounting period.

Cost of Goods Manufactured

The total production cost of goods that are completed and ready for sale during a specific accounting period, including the costs of raw materials, labor, and overhead.