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12) You recently purchased a stock that is expected to earn 21 percent in a booming economy, 16 percent in a normal economy, and lose

12) You recently purchased a stock that is expected to earn 21 percent in a booming economy, 16 percent in a normal economy, and lose 5 percent in a recessionary economy. There is a 20 percent probability of a boom, a 65 percent chance of a normal economy, and a 15 percent chance of a recession. What is your expected rate of return on this stock?

3.13 percent

6.92 percent

10.67 percent

12.33 percent

13.85 percent

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