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Consider the following information: State of Economy Recession Normal Boom Probability of State of Economy 0.21 0.45 0.34 Rat

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Answer #1

Expected return = Probability of State of Economy * rate of Return if State occurs

=0.21*-0.09+0.45*0.13+0.34*0.30

= 14.16%

Answer : 14.16%

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