Bernard Companies stock has an expected return of 9.5 percent. The stock is expected to return...

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Answer 1

Answer #1

Am) Given data - Expected return =9.5% Assume x = Return during secission We know that Expected Return = (Boobability of acci

Answer 2

Answer #2

SOLUTION :

Expected return = 9.5%

= P(recession) * r (recession) + P(normal) * r (normal) + P(boom) * r(boom)

= 0.10 * r(recession) + 0.84 * 11 + 0.06 * 13.4

= 0.10 * r(recession) + 10.044

=> r(recession) = (9.5 - 10.044) / 0.10 = - 5.44 %

So, return during recession economy is = - 5.44 % (ANSWER).

answered by: Tulsiram Garg

Answer 3

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