You have decided to invest $100,000 on stock A and believe that the probabilities of having a boom next year is 15%, of

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You Have Decided To Invest 100 000 On Stock A And Believe That The Probabilities Of Having A Boom Next Year Is 15 Of 1 (50.65 KiB) Viewed 80 times

You have decided to invest $100,000 on stock A and believe that the probabilities of having a boom next year is 15%, of having a stable economy is 70%, and of having a recession is 15%. 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 $26 and the dividend next year is $2. For recession, the Stock A price next year is $15 and the dividend next year is $0. For boom, the Stock B price next year is $18 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 $26, and stock B's current price is $13. What is the expected rate of return of your portfolio over the following year? The rate is 11.31% The rate is 8.85% The rate is 11.92%. The rate is 9.46%.