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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?  State of  Probability of  Rate of Return  Economy  State of Economy  if State Occurs  Stock A  Stock B  Stock C  Boom .25.19.13.07 Nonnal .72.15.05.13 Bust .03.29.14.22\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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