Question $1$

$4$ pts

There are two potential states of the economy for next year: boom and bust. The probability of a boom state is $30\%,$ and that of a bust state is $70\%.$

The return of Stock B will be $12\%$ in a boom state, and $-2\%$ in a bust state.

Find the expected return of Stock B$.$

$12\%$

$-2\%$

$2\mathrm{.}2\%$

$5\%$