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What is the expected return on an asset that is expected to have returns of -10%, 8%, and 20% when the economy is in boom,
What is the expected return on an asset that is expected to have returns of -10%, 8%, and 20% when the economy is in boom, normal, and recession states, respectively? The probabilities of boom, normal, and recession states happening are 20%, 50%, and 30%, respectively.
A)6.00%
B)2.67%
C)8.00%
D)5.00%
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