The Inferior Goods Co

Multiple Choice

The Inferior Goods Co.stock is expected to earn 22 percent in a recession,7 percent in a normal economy,and lose 14 percent in a booming economy.The probability of a boom is 20 percent while the probability of a normal economy is 55 percent.What is the expected rate of return on this stock?

A) 6.55%
B) 12.15%
C) 4.75%
D) 8.60%
E) 11.75%