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Expected rate of return if economy is in boom period


Problem:

RETURNS
State of Economy Probability of State Stock A Stock B Stock C
Boom .10 22% 18% 5%
Normal .85 14% 13% 11%
Recession .05 -28% 4% 17%

Phil has a portfolio comprised of 60 percent stock A, 5 percent stock B, and 35 percent stock C. What is his expected rate of return if the economy is in a boom period?

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Finance Basics: Expected rate of return if economy is in boom period
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