Assume you have $100 in stock 1 and $200 in stock 2. Stock 1…
Assume you have $100 in stock 1 and $200 in stock 2. Stock 1 and Stock 2 have following probability distribution: Probability Return on Stock 1 Return on Stock 2Recession 0.1 -0.10 -0.04Normal 0.6 0.02 0.01Expansion 0.3 0.10 0.03 What is the average return on Stock 2?