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A stock has an expected return of 10.38 percent. Based on the following information, what is...

A stock has an expected return of 10.38 percent. Based on the following information, what is the stock's return in a boom state of the economy?

State of Economy Probability of State
of Economy		 Rate of Return if
State Occurs
Recession .29 − 9.7 %
Normal .40 11.2 %
Boom .31 ?

Multiple Choice

  • 26.35%

  • 28.11%

  • 29.38%

  • 30.66%

  • 24.59%

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Answer #1

A4 X ✓ fc =+C4/B4 А 1 Return (r) Probability [(P(r)] Expecte return [rxP(r)=u] -9.70% 0.29 -2.81% 3 11.20% 4.48% 4 28.11% 0.3

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