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There are equal chances that the economy will be a booming or normal economy. If an...

There are equal chances that the economy will be a booming or normal economy. If an investment in the firm would yield 60% return during a boom, and 30% return during a normal economy, what is the expected rate of return for this investor given those possible returns and probabilities?

Group of answer choices

25.00%

30.00%

50.00%

60.00%

45.00%

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Answer #1

45.00%

State of Economy Probability Return
a b c=a*b
Booming           0.50 60% 30.00%
Normal           0.50 30% 15.00%
Total 45.00%
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