The rate of return for a stock is 8% if the state of the economy is recession,
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Question:
The rate of return for a stock is 8% if the state of the economy is recession, 12% if the state of the economy is normal, and 17% if the state of the economy is expansion. The probability for each state of the economy is 20%, 70%, and 10%, respectively. What is the expected return for this stock?
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