What is the expected return on a security given the above information State of Economy Rate...

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Question

What is the expected return on a security given the above information

State of Economy Rate of Return Recession Normal Boom Probability of State of Economy 0.14 0.75 0.11 0.18 0.11 -0.05 What is

Answer 1

Answer #1

expected return=respective return*Respective probability

=(0.14*18)+(0.75*11)+(0.11*-5)

which is equal to

=10.22%

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Answer 2

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