You Have a Portfolio Which Is Comprised of 55% of Stock

question 88

Multiple Choice

You have a portfolio which is comprised of 55% of Stock A and 45% of Stock B. What is the expected return on this portfolio?
$\begin{array}{lrrr}\text { State of the Economy } & \text { Probability } & \text { E(R) }_{A}& \text { E(R) }_{B}\\\text { Weight } & & 55 \% & 45 \% \\\text { Boom } & .15 & 19 \% & 12\% \\\text { Normal } & .65 & 11 \% & 7 \% \\\text { Recession } & .20 & -16 \% & 1 \%\end{array}$

• A)5.45%
• B)6.69%
• C)7.14%
• D)7.60%
• E)8.22%

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Definitions:

Growth Strategy

Approaches or plans implemented by a business or organization aimed at expanding its operations, increasing market share, or achieving higher revenues.

Profitable Growth

An increase in revenue that exceeds costs and expenses, resulting in a net gain for the business.

Financial Losses

The negative financial impact experienced by a business or individual when expenses surpass income or when assets depreciate in value.

Value Creation

The process of generating additional worth through products, services, or activities, enhancing the value offered to customers or stakeholders.