You have decided to invest $120.000 on stock A and $70,000 on stock B. You believe that the probabilities of having a bo

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answerhappygod
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You have decided to invest $120.000 on stock A and $70,000 on stock B. You believe that the probabilities of having a bo

Post by answerhappygod »

You have decided to invest $120.000 on stock A and $70,000 on
stock B. You believe that the probabilities of having a boom next
year is 30%, of having a stable economy is 45%, and of having a
recession is 25%, For boom, the Stock A price next year is $40 and
the dividend next year is $3. For stable, the Stock A price next
year is $33 and the dividend next year is $2. For recession, the
Stock A price next year is $25 and the dividend next year is $0.
For boom, the Stock B price next year is $16 and the dividend next
year is $0. For stable, the Stock B price next year is $15 and the
dividend next year is $0. For recession, the Stock B price next
year is $9 and the dividend next year is $0. Stock A's current
price is $30, and stock B's current price is $12. What is the
expected rate of return of your portfolio over the following
year?
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