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Shares of Rodger's Insurance stock will return -7.4% during a recession, 5.6% during a normal economy,...

Shares of Rodger's Insurance stock will return -7.4% during a recession, 5.6% during a normal economy, and 16.3% during a boom economy. If there is a 6% chance of recession, and 20% chance of a boom, what is the expected return for Rodger's? (Enter your response as a percentage with two decimal places, ex: 12.34)

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Answer #1

Ans 6.96

STATE Probability (P) RETURN (Y) (P * Y )
RECESSION 6% -7.4 -0.44
NORMAL 74% 5.6 4.14
BOOM 20% 16.3 3.26
TOTAL 6.96
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