Stock A has the following returns for various states of the economy: State of Economy Probability...

Question

Question

Stock A has the following returns for various states of the economy:

State of Economy Probability Stock A's Return

Recession 5% -50%

Below average 25% -3%

Average 35% 10%

Above average 20% 20%

Boom 15% 45%

Stock A's expected return is _________

   11%
   22%
   4.4%
   9.75%

Answer 1

Answer #1

expected return [return x probability ] 2.50% -0.75% 3.50% 4.00% 6.75% 11% returns economy Recession Below average Average Ab

Answer 2

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