Homework Answers
Expected return of stock =
| State of Economy | Probability (P) | Returns (R) | P * R |
| Recession | 6% | -20.8% | -1.248% |
| Poor | 21% | 4,4% | 0.924% |
| Normal | 47% | 12,2% | 5.734% |
| Boom | 26% | 27.9% | 7.254 |
| Total Expected return on Stock is | 12.664% | ||
Stock's Expected return = 12.664%
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