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Suppose you have predicted the following returns for NeuMart Restaurant Group in two possible states of economy. State of Economy Probability (P i ) Return
Suppose you have predicted the following returns for NeuMart Restaurant Group in two possible states of economy.
State of Economy | Probability (Pi) | Return (Ri) |
Normal | 0.7 | 0.08 |
Recession | 0.3 | 0.15 |
What is the expected return of the NeuMart stock?
a. 10.10%
b. 9.25%
c. 12.20%
d. 13.40%
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