What Is the Expected Return on a Portfolio Comprised of €4,000

question 4

Multiple Choice

What is the expected return on a portfolio comprised of €4,000 in share M and €6,000 in share N if the economy enjoys a boom period?
$\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad$ Returns if
$\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad$ State Occurs
$\begin{array}{|l|l|l|l|}\hline \text { State of Economy } & \text { Probability of State of Economy } & \text { ShareM } & \text { Share N } \\\hline \text { Boom } & 10 \% & 18 \% & 10 \% \\\hline \text { Normal } & 75 \% & 7 \% & 8 \% \\\hline \text { Recession } & 15 \% & -20 \% & 6 \% \\\hline\end{array}$

• A)6.4%
• B)6.8%
• C)10.4%
• D)13.2%
• E)14.0%

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