Problem 8-01

You 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 10 percent loss. Slow economic growth may generate a return of 5 percent. If the probability is 15 percent for rapid growth, 25 percent for a declining economy, and 60 percent for slow growth, what is the expected return on this investment? Round your answer to one decimal place.