Question
You have forecasted that there are 3 possible future states of the world. The good state will occur 45% of the time. The so-so state
You have forecasted that there are 3 possible future states of the world. The good state will occur 45% of the time. The so-so state will occur 30% of the time and the bad state will occur 25% of the time.You believe ABC's stock return in the good state will be 32.90%. In the so-so state you believe that ABC stock will have a return of 12.00%. In the bad state, ABC will have a return of -14.50%. What is ABC's expected return? Your answer should be accurate to two decimal places and it should be recorded as a percentage. Therefore, 1.2348392 would be recorded as 123.48.
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