What is the expected rate of return on the portfolio

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Reference no: EM131613029

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? 5.59% 5.62% 5.66% 5.71% 5.74%

Reference no: EM131613029

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