What Is the Expected Return on a Portfolio Comprised Of \mathrm

Multiple Choice

What is the expected return on a portfolio comprised of $\mathrm { C } , 000$ in share M and

in share N if the economy enjoys a boom period?
$\begin{array} { | l | l | l | l | } \hline & & \text { Returns if State Occurs } \\\hline \text { State of Economy } & \text { Probability of State of Economy } & \text { Share M } & \text { Share N } \\\hline \text { Boom } & 10 \% & 18 \% & 10 \% \\\hline \text { Normal } & 75 \% & 7 \% & 8 \% \\\hline \text { Recession } & 15 \% & - 20 \% & 6 \% \\\hline\end{array}$

A) 6.4%
B) 6.8%
C) 10.4%
D) 13.2%
E) 14.0%