An Analyst Predicts Two Economic States Next Year

question 115

Essay

An analyst predicts two economic states next year.A boom economy has a 70% probability of occurring, while a recession has a 30% probability of occurrence.A portfolio contains two stocks L and U.Stock L has a 40% weighting in the portfolio, while stock U has a 60% weighting.Stock L is estimated to provide a 10% return in a boom economy and a 4% return in a recession.Stock U is estimated to provide a 5% return in a boom economy and a -8% return in a recession.Calculate the portfolio return.

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Definitions:

Society

A community of people living together in a more or less ordered community, often with shared laws, traditions, and values.

Wrongs

Actions or conduct that are considered unjust, immoral, or harmful to others, often subject to legal remediation.

Redress

The remedy or compensation for a wrong or grievance.

Cyberlaw

An informal term used to refer to all laws governing electronic communications and transactions, particularly those conducted via the Internet.