A Portfolio Is Expected to Return 15 Percent in a Booming

question 58

Multiple Choice

A portfolio is expected to return 15 percent in a booming economy,12 percent in a normal economy,and lose 9 percent if the economy falls into a recession.The probability of a boom is 25 percent while the probability of a recession is 15 percent.What is the overall portfolio expected return?

• A)5.42%
• B)6.83%
• C)9.60%
• D)10.05%
• E)10.81%

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Definitions:

Accommodate

Adjusting actions or decisions to take into account others' needs, preferences, or special requirements.

Avoid

To keep away from or stop oneself from doing something; an action or strategy aimed at preventing undesirable outcomes.

Sources Of Conflict

These are underlying reasons or conditions that lead to disagreement or contention between individuals or groups.

Resolve

The determination to do something or solve a problem; also refers to the act of finding solutions to issues or conflicts.