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Consider the following information: State of Economy Probability of State of Economy Rate of Return if State Occurs Recession 0.21 -0.09 Normal 0.45 0.16 Boom

Consider the following information:

State of Economy Probability of State of Economy Rate of Return if State Occurs
Recession 0.21 -0.09
Normal 0.45 0.16
Boom 0.34 0.24

Required:
Calculate the expected return.

rev: 09_20_2012

Multiple Choice

  • 13.47%

  • 12.80%

  • 14.01%

  • 2.07%

  • 14.14%

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