What Is the Expected Return on a Portfolio Comprised of $9,750

Multiple Choice

What is the expected return on a portfolio comprised of $9,750 of Stock X and $4,520 of Stock Y if the economy enjoys a boom period? $$\begin{array} { l c c } { \text { State of } } & \text { Probability of } & \text { Rate of Return } \\\text { Econony } & \text { State of Economy } & \text { if State Occurs } \\ & &\begin{array}{ll}\text { Stock X } & \text { Stock Y }\end{array}\\\text { Boom } & .25& \begin{array}{ll}.108 & \quad \quad .156\end{array} \\\text { Normal } & .65 & \begin{array}{ll}.087 & \quad \quad.097\end{array} \\\text { Recession } & .10&\begin{array}{ll} .024 & \quad \quad -.069\end{array}\end{array}$$

A) 11.93 percent
B) 11.67 percent
C) 12.55 percent
D) 12.78 percent
E) 12.32 percent