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What is the expected rate of return for the following stock. The current price, P0, is 30. Economic condition (i) Good Average Bad Probability (xi)

What is the expected rate of return for the following stock. The current price, P0, is 30.

Economic condition (i)

Good

Average

Bad

Probability (xi)

0.2

0.4

0.4

Possible stock price (P1,i)

50

40

35

Possible dividend per share (D1,i)

2.2

2

1.5

Select one:

a. .3947

b. .3351

c. .3085

d. .4381

e. .4723

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