You recently purchased a stock that is expected to earn 25 percent in a booming economy, 10 percent in a normal economy, and lose 12 percent in a recessionary economy. There is a 4 percent probability of a boom and a 60 percent chance of a normal economy. What is your expected rate of return on this stock?

Multiple Choice

• -1.12 percent

• 2.04 percent

• 2.28 percent

• 1.56 percent

• 2.68 percent