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Question

1. Stock A has the following returns for various states of the economy: State of the Economy Probability Stock A's Return Recession 10% -30% Below Average 20% -5% Average 40% 8% Above Average 25% 25% Boom 5% 50% Stock A's expected return is:

a)8.75%

b)48%

c)7.95%

d)9.6%