Expected return on the risk-free asset

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Reference no: EM13971604

State	Probability	Return on Stock X	Return on Stock Y
Boom	60	0.15	0.08
Bust	40	0.05	0.20

What is the standard deviation of Stock X? What is the expected return on a portfolio that is equally weighted amongst Stocks X&Y, and a risk free asset? The expected return on the risk-free asset is 4%. Is the answer 8.9, 9.3, 10.1 or 11.8?

Reference no: EM13971604

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