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An analyst estimated return of company XYZ stock over the next year, using several scenarios and obtained the following data: State of the economy Scenario
An analyst estimated return of company XYZ stock over the next year, using several scenarios and obtained the following data:
State of the economy | Scenario probability | ABC Return |
very poor | 0.15 | -15.0% |
poor | 0.30 | -5.0% |
moderate | 0.30 | 4.5% |
good | 0.20 | 12.5% |
excellent | 0.05 | 17.0% |
Expected return of stock XYZ is:
A. 1.85%
B. 0.95%
C. 2.9%
D. -0.35%
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