An Investor Has a Portfolio with 30% Invested in Gold

Multiple Choice

An investor has a portfolio with 30% invested in gold stocks, and 70% in industrial stocks. It is expected that gold stocks will provide a 4% return in a good economy and 18% in a poor economy. Industrial stocks are expected to provide 9% return in a good economy and -9% in a poor economy. The probability of a good economy is 40% and 60% in a poor economy. Given this information, calculate the expected return on the portfolio.

A) 1.46%
B) 2.46%
C) 3.46%
D) 4.46%
E) 5.46%