Problem 8-01

You are considering buying stock A. If the economy grows rapidly, you may earn 15 percent on the investment, while a declining economy could result in a 25 percent loss. Slow economic growth may generate a return of 7 percent. If the probability is 17 percent for rapid growth, 13 percent for a declining economy, and 70 percent for slow growth, what is the expected return on this investment? Round your answer to one decimal place.