After some study of the economy, your forecast for next year is that a boom economy has a 30% chance of occurring, a neutral economy 50%, and a bust economy a 20% chance of occurring. You also estimate that a certain stock would have a return of 33% in a boom economy next year, 21% in a neutral economy , and -11% in a bust economy. The risk-free rate is 4.5%. What is the expected risk premium for this stock next year? (Answer to the nearest tenth of a percent, but do not use a percent sign).
Probability
Return
Boom Economy
30%
33%
Neutral Economy
50%
21%
Bust Economy
20%
-11%
Risk-Free Rate = 4.5%