Q1. You recently purchased a share that is expected to earn 16% in a booming economy, 12% in a normal economy, and lose 8% in a recessionary economy. There is a 20% probability of a boom, a 70% probability of a normal economy, and a 10% chance of a recession.

What is your expected rate of return on this share?

A 6.00%

B 6.67%

C 8.60%

D 10.80%