A Portfolio Consists of $12,000 of Stock K and $23,000

Multiple Choice

A portfolio consists of $12,000 of stock K and $23,000 of stock L.Stock K will return 14 percent in a booming economy and 5 percent in a normal economy.Stock L will return 10 percent in a booming economy and 6 percent in a normal economy.The probability of the economy booming is 22 percent.What is the expected rate of return on the portfolio if the economy is normal?

A) 5.59%
B) 5.62%
C) 5.66%
D) 5.71%
E) 5.74%