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Folsom Construction's stock is expected to earn 6 percent in a weak economy, 15 percent in a normal economy, 24 percent in a strong economy,
Folsom Construction's stock is expected to earn 6 percent in a weak economy, 15 percent in a normal economy, 24 percent in a strong economy, 34 percent in a booming economy, and lose 18 percent in a recession. The probability of a recession is 7 percent, the probability of weak economy is 15 percent, the probability of a normal economy is 50 percent, the probability of a strong economy is 20 percent, and the probability of a booming economy is 8 percent. What is the expected rate of return on this stock?
A. | 14.66% | |
B. | 12.41% | |
C. | 16.17% | |
D. | 13.76% | |
E. | 15.92% |
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