Problem 11-1

Use the following information on states of the economy and stock returns to calculate the expected return for Dingaling Telephone: (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

State of Economy	Probability of State of Economy		Security Return If State Occurs
Recession	.30		6.50	%
Normal	.55		9.00
Boom	.15		19.00

Expected return

%