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What Is the Expected Return on a Portfolio Comprised Of €

Question 106

Multiple Choice

What is the expected return on a portfolio comprised of 3,000€ 3,000 in share K and 5,000\in 5,000 in share L if the economy is normal?
 Returns if State Occurs  State of Economy  Probability of State of Economy  Share K  Share L  Boom 20%14%10% Normal 80%5%6%\begin{array} { | l | l | l | l | } \hline & & \text { Returns if State Occurs } \\\hline \text { State of Economy } & \text { Probability of State of Economy } & \text { Share K } & \text { Share L } \\\hline \text { Boom } & 20 \% & 14 \% & 10 \% \\\hline \text { Normal } & 80 \% & 5 \% & 6 \% \\\hline\end{array}


A) 3.75%
B) 5.25%
C) 5.63%
D) 5.88%
E) 6.80%

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