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ou are considering buying stock A. If the economy grows rapidly, you may earn 20 percent on the investment, while a declining economy could result
ou are considering buying stock A. If the economy grows rapidly, you may earn 20 percent on the investment, while a declining economy could result in a 25 percent loss. Slow economic growth may generate a return of 4 percent. If the probability is 20 percent for rapid growth, 18 percent for a declining economy, and 62 percent for slow growth, what is the expected return on this investment? Round your answer to one decimal place.
3.6% | ||
-6.0% | ||
5.5% | ||
2.0% |
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