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Compute the expected return given these three economic states, their likelihoods, and the potential returns: Economic State Probability Return Fast Growth 0.3 40 % Slow

Compute the expected return given these three economic states, their likelihoods, and the potential returns:

Economic State Probability Return
Fast Growth 0.3 40 %
Slow Growth 0.4 15 %
Recession 0.3 15 %
  • 13.5 percent

  • 22.5 percent

  • 18.3 percent

  • 40.0 percent

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