You recently purchased a stock that is expected to earn 12 percent in a booming economy, 8 percent in a normal economy and lose 5 percent in a recessionary economy. There is a 15 percent probability of a boom, a 75 percent chance of a normal economy, and a 10 percent chance of a recession. What is your expected rate of return on this stock?

Select one:

a. 7.65 percent

b. 7.30 percent

c. 8.30 percent

d. 5.00 percent

e. 6.45 percent