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Remember, the expected value of a probability cistribution is a statistical measure of the average (miean) value expected to occur during all possible circamstances. To compute an asset's expected return under a range of possible circumstances (cr. states of nature), multiphy the anticiajed retum. eveected to result during each state of nature by its probability of occurrence. Consider the following caces Ian owns a two-stock portfolio that imvests in Bue Lama Mining Company (BuM) and Hungry Whale Electronics (HWF). Three-quartera of tan't portiolis value censists of atwis shares, and the balance consists of HWE's shares. Each stock's ixpected return for the next year will depend on forecasted macket conditions, The expected returns from the stocks in different market constions are detaled in the fotowisg tablel Calculate expected returs for the indwidael stocks in Jans portfollo is woi as the expected rate of return of the ensire poittolis over the three possible murket condibas nex year. - The expected rate of returit on Iflue Lama Miring's stock over the next year is - The expectod rate of returm an Hungry Whale Electranics y stock over the next yoar is Calcilste expected returns for the individual stocks in tan's portotis as well as the expected rate of return of the entire portfollo over the thined possele market conditions next yeac. - The expected rate of retum ea Blue Llama Mining's stock over the next year is - The expected rate of retum on Hungry whale Filectronics's steck over the next year is - The expected rate of return on lan's portiolio over the next year is The expected returns for faris portfolio were calculated based on three posecle conditions in the market. Such conditions mill vary from time to time, and for each condition there will be a specific outcome. These probabilities and outcomes can be represented in the form of a cantinuscis probativify distribution graphi. For example, the continuous probsbility distroutions of rates of retum on stocks for two different companies are shown on the following graph: Ch 08: Assignmenit + Riskand Pates of Ropturn traleg and Study Toels ntal Eptions Hege 5 uccess:ips reer Success. Tips Feectack Essed on the grapt y irfarmation, which statement is false? Company H has lower risk Company 6 has lower nsk

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