Multiple Choice
You are considering investing in a project with the following possible outcomes: Probability of Investment
States Occurrence Returns
State 1: Economic boom 15% 16%
State 2: Economic growth 45% 12%
State 3: Economic decline 25% 5%
State 4: Depression 15% -5%
Calculate the expected rate of return for this investment.
A) 9.8%
B) 7.0%
C) 8.3%
D) 6.3%
Correct Answer:
Verified
Correct Answer:
Verified
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