Part A) A stock is expected to return 13% in an economic boom, 10% in a normal economy, and 3% in a recessionary economy. Which one of the following will increase the overall expected rate of return on this stock?
A. A increase in the probability of a recession occurring
B. a decrease in the probability of an economic boom
C. An increase in the probability of an economic boom
D. An decrease in the rate of return in a recessionary economy
Part B) The systematic risk principle states that the expected return on a risky asset depends only on which one of the following ?
A. Company-specific risk
B. Diversifiable risk
C. systematic risk
D. unsystematic risk
Part C) you own a $35,000 portfolio consisting of two stocks, A and B. Stock A is valued at $16,800 and has an expected retun of 10%. Stock b has an expected return of 5%. what are the weights of stock A and B in the portfolio?
A. 35% , 65%
B. 48% , 52 %
C. 52%, 48%
D. 65%, 35%
Part D) Based on the information from Part C, What is the expected return in the portfolio?
A. 9.40%
B. 7.40 %
C. 8.95%
D. 10.83%