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What Is the Expected Return on a Portfolio Comprised of €3,000

Question 80

Multiple Choice

What is the expected return on a portfolio comprised of €3,000 in share K and €5,000 in share L if the economy is normal?
\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad Returns if
\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad State Occurs
 State of Economy  Probability of State of Economy  ShareK  Share L  Boom 20%14%10% Normal 30%5%6%\begin{array}{|l|l|l|l|}\hline \text { State of Economy } & \text { Probability of State of Economy } & \text { ShareK } & \text { Share L } \\\hline \text { Boom } & 20 \% & 14 \% & 10 \% \\\hline \text { Normal } & 30 \% & 5 \% & 6 \% \\\hline\end{array}


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

Correct Answer:

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