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Consider the following information on returns and probabilities: Invest 0 of your money in Asset A...

Consider the following information on returns and probabilities:

Invest 0 of your money in Asset A and 100%in Asset B.

State      Probability           A             B                           

Boom         .25                   12%       4%         

Bust            .75                   6%         18%      

What is the expected return for the portfolio?

a. 1.7   

b. 2.9  

c. 3.9  

d. 14.5     

e. 15.5

f. 16.9    

g. 7.5    

h. 9.0

   i. 8.2  

j. 11                   
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