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You recently purchased a stock that is expected to earn 21 percent in a booming economy, 16 percent in a normal economy and lose 5
You recently purchased a stock that is expected to earn 21 percent in a booming economy, 16 percent in a normal economy and lose 5 percent in a recessionary economy. There is 20 percent probability of a boom, 65 percent chance of normal economy, and 15 percent chance of a recession. What is your expected rate of return on this stock?
12.33%
10.67%
3.13%
13.85%
6.92%
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