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You are thinking about investing your money in the stock market. You have the following two stocks in mind: stock A and stock B. You

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You are thinking about investing your money in the stock market. You have the following two stocks in mind: stock A and stock B. You know that the economy can either go in recession or it will boom. Being an optimistic investor, you believe the likelihood of observing an economic boom is seventy five observing an economic depression. You also know the following about your two stocks: State of the Probability B Economy Return Return Boom 14% 2% Recession -4% 40% Calculate the expected return for stock A only

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