Problem:
You recently purchased a stock that is expected to earn 22 percent in a booming economy, 11 percent in a normal economy, and lose 4 percent in a recessionary economy. There is a 24 percent probability of a boom, a 67 percent chance of a normal economy, and a 9 percent chance of a recession.
Required:
Question: What is your expected rate of return on this stock?
- 6.14 percent
- 11.00 percent
- 12.29 percent
- 9.67 percent
- 3.45 percent
Note: Please provide full description.