You Recently Purchased a Stock That Is Expected to Earn

Multiple Choice

You recently purchased a stock that is expected to earn 19% in a booming economy, 11% in a normal economy and lose 15% in a recessionary economy. There is a 20% probability of a boom, a 65%
Chance of a normal economy, and a 15% chance of a recession. What is your expected rate of return
On this stock?

A) 6.8%
B) 7.4%
C) 8.7%
D) 11.6%
E) 13.2%