17

The common stock of Joyce Co. is expected to earn 13 percent in a recession, 6 percent in a normal economy, and lose 4 percent in a booming economy. The probability of a boom is 5 percent while the probability of a recession is 45 percent. What is the expected rate of return on this stock?

Group of answer choices

8.75 percent

9.28 percent

8.65 percent

7.80 percent

9.05 percent