1. Stock A has the following returns for various states of the economy:
Probability Stock A's Return Recession
State of the Economy 10% -30%
Below Average 20% -2%
Average 40% 10%
Above Average 20% 18%
Boom 10% 40%
Stock As expected return is?
a. 5.4
b. 7.2
c. 8.2
d. 9.6