Florida Company (FC)and Minnesota Company (MC)are Both Service Companies

Multiple Choice

Florida Company (FC) and Minnesota Company (MC) are both service companies. Their stock returns for the past three years were as follows: FC: -5 percent, 15 percent, 20 percent; MC: 8 percent, 8 percent, 20 percent. If FC and MC are combined into a portfolio with 50 percent of the funds invested in each stock, calculate the expected return on the portfolio.

A) 12 percent
B) 10 percent
C) 11 percent
D) 9 percent