You Have a Portfolio Which Is Comprised of 60% of Stock

question 24

Multiple Choice

You have a portfolio which is comprised of 60% of Stock A and 40% of Stock B. What is the expected rate of return on this portfolio?
$\begin{array}{lrrr}\text {State}&\text {Prob}&\text {A}&\text {B}\\\text { Boom } & .20 & 15 \% & 9\% \\\text { Normal } & .80 & 8 \% & 20\%\end{array}$

• A)12.76%
• B)12.88%
• C)13.44%
• D)13.56%
• E)13.85%

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Definitions:

Mental Set

The perspective that a person takes and the assumptions he makes in approaching a problem.

Analogical Representation

A mental representation of one thing that is similar in some way to another; used in problem-solving and reasoning.

Propositions

Statements or assertions that express judgments or opinions which can be either true or false.

Symbolic

Pertaining to symbols or symbolism; using symbols to represent ideas or qualities.