What Is the Expected Return on a Portfolio That Is

Multiple Choice

What is the expected return on a portfolio that is invested 22 percent in Stock A, 36 percent in Stock B, and the remainder in Stock C? $$\begin{array} { l ccccc } { \text { State of } } & { \text { Probability of } } &&\text { Rate of Return }\\\text { Economy } & \text { State of Economy } & &{ \text { if State Occurs } } \\& & \text { Stock A } & \text { Stock B } & \text { Stock C } \\\text { Boom } & .05 & .18 & .11 & .13 \\\text { Normal } & .92 & .09& .08 & .06 \\\text { Bust } &.03& - .07& - .05 & -.14\end{array}$$

A) 7.06 percent
B) 7.38 percent
C) 6.99 percent
D) 7.29 percent
E) 6.84 percent