1. What is the expected return on this stock given the following information? State of the...
1. What is the expected return on this stock given the following information?
|
State of the Economy |
Probability |
E(R) |
|
|
Boom |
0.4 |
14% |
|
|
Recession |
0.6 |
-18% |
|
A) -8.07 percent
B) -7.69 percent
C) -6.80 percent
D) -5.70 percent
E) -5.20 percent
Homework Answers
Expected reeturn=Respective return*Respective probability
=(0.4*14)+(0.6*-18)
which is equal to
=(5.2%)(Negative figure).
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1. What is the expected return on this stock given the following
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