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Peter is considering investing purchasing a stock as follows: ECONOMY RETURN PROBABILITY Growth 20% 60% Stable 7% 30% Recession -8% 10% Suppose the Risk Free

Peter is considering investing purchasing a stock as follows:

ECONOMY RETURN PROBABILITY

Growth 20% 60%

Stable 7% 30%

Recession -8% 10%

Suppose the Risk Free Rate is 7% and Risk Premium is 8%, what return should he expect from the investment?

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