You are considering several securities for potential investment. Your investment advisor has provided you with the following probability distributions for the returns on these securities under different possible economic climates for the coming year. The betas for each firm are based on the Capital Asset Pricing Model and measure the non-diversifiable risk of each investment.

Economy Probability Zumwalt Corp. Andys Bagels Gallagher Pet Supplies

Recession .10 5% 18% -10%

Below Average .25 10 15 0

Average .30 15 10 10

Above Average .25 20 15 20

Boom .10 25 18 30

Beta 1.5 1.0 .5

7-1. Calculate the expected return for each of the investments above.