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The Inferior Goods Co. stock is expected to earn 22 percent in a recession, 7 percent in a normal economy, and lose 14 percent in
The Inferior Goods Co. stock is expected to earn 22 percent in a recession, 7 percent in a normal economy, and lose 14 percent in a booming economy. The probability of a boom is 20 percent while the probability of a normal economy is 55 percent. What is the expected rate of return on this stock?
A. | 6.55% | |
B. | 12.15% | |
C. | 4.75% | |
D. | 8.60% | |
E. | 11.75% |
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