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You recently purchased a stock that is expected to earn 16 percent in a booming economy, 11 percent in a normal economy, and lose 2
You recently purchased a stock that is expected to earn 16 percent in a booming economy, 11 percent in a normal economy, and lose 2 percent in a recessionary economy. There is a 18 percent probability of a boom, a 64 percent chance of a normal economy, and a 18 percent chance of a recession. What is your expected rate of return on this stock?
4.78 percent
4.00 percent
9.00 percent
9.56 percent
8.33 percent
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