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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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