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John plans to invest in a stock. He finds that the market condition in the coming year is very uncertain. He makes the following prediction.
John plans to invest in a stock. He finds that the market condition in the coming year is very uncertain. He makes the following prediction. If the market is good (the probability is 0.4), the return of the stock will be 18%; if the market is normal (the probability is 0.4), the return from it will be 14%; if the market is bad (the probability is 0.2), the return from it will be only 7%. Please calculate the expected return of this stock.
Group of answer choices
14.2%
6.5%
13.8%
8%
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