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You are talking to your equity analyst about Callahan Auto's stock. Based on his projections in a Good, Average and Bad state of the economy
You are talking to your equity analyst about Callahan Auto's stock. Based on his projections in a Good, Average and Bad state of the economy you think the below probabilities and returns exist for the stock. What is Callahan Auto's expected return under these assumptions?
Conditions Prob. Return
Good .20 15%
Average .45 10%
Poor .35 -12%
1.00 (is sum)
A) 3.56%
B) 4.14%
C) 3.30%
D) 3.92%
E) 2.87%
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