Multiple Choice
You recently purchased a stock that is expected to earn 12% in a booming economy,8% in a normal economy and lose 5% in a recessionary economy. There is a 15% probability of a boom,a 75% chance of a normal economy,and a 10% chance of a recession. What is your expected rate of return on this stock?
A) 5.00%
B) 6.45%
C) 7.30%
D) 7.65%
E) 8.30%
Correct Answer:
Verified
Correct Answer:
Verified
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