Suppose Ginny owns a two-stock portfolio that invests in Blue Llama Mining Company (BLM) and Hungry Whale Electronics (H

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Suppose Ginny Owns A Two Stock Portfolio That Invests In Blue Llama Mining Company Blm And Hungry Whale Electronics H 1 (82.01 KiB) Viewed 41 times

Suppose Ginny owns a two-stock portfolio that invests in Blue Llama Mining Company (BLM) and Hungry Whale Electronics (HWE). Three-quarters of Ginny's portfolio value consists of Blue Llama Mining's shares, and the remaining balance consists of Hungry Whale Electronics's shares. Each stock's expected return for the next year will depend on forecasted market conditions. The expected returns from the stocks in different market conditions are detailed in the following table: Probability of Occurrence Expected Returns BLM HWE Market Condition Strong 50% 30% 42% Normal 25% 18% 24% Weak 25% -24% -30% Calculate the expected returns for the individual stocks in Ginny's portfolio as well as the expected rate of return of the entire portfolio over the three possible market conditions next year. • The expected rate of return on Blue Llama Mining's stock over the next year is • The expected rate of return on Hungry Whale Electronics's stock over the next year is • The expected rate of return on Ginny's portfolio over the next year is