1. Stock A has the following returns for various states of the economy:

Probability Stock A's Return Recession

State of the Economy 10% -30%

Below Average 20% -2%

Average 40% 10%

Above Average 20% 18%

Boom 10% 40%

Stock As expected return is?

a. 5.4

b. 7.2

c. 8.2

d. 9.6