1. Consider the following information: State of Economy Probability of State of Economy Portfolio Return If State Occurs Recession .24 − .14 Boom .76 .24 Calculate the expected return. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Expected return %

2. Consider the following information: State of Economy Probability of State of Economy Portfolio Return If State Occurs Recession .15 − .22 Normal .51 .17 Boom .34 .31 Calculate the expected return. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Expected return %

3. You want to create a portfolio equally as risky as the market, and you have $1,400,000 to invest. Given this information, fill in the rest of the following table: (Do not round intermediate calculations. Round your answers to the nearest whole number, e.g., 32.) Asset Investment Beta Stock A $ 196,000 1.10 Stock B $ 350,000 1.40 Stock C $ 434000 1.60 Risk-free asset $ 420000 ReferenceseBook & Resources.