A stock is expected to return 20 percent in a booming economy, 10 percent in a normal economy, and lose 5 percent in a recession. The probabilities of an economic boom, normal state, or recession are 10 percent, 85 percent, and 5 percent, respectively. What is the expected rate of return on this stock?

Multiple Choice

• 10.25 percent

• 11.92 percent

• 9.54 percent

• 11.68 percent