The stock has an expected return of 3.3%. Given the information below, what is the expected return on this stock if the economy booms?
State of Economy |
Probability |
Rate of Return |
Recession |
0.35 |
-0.04 |
Normal |
0.6 |
0.07 |
Boom |
0.05 |
? |
a. 8.6%
b. 10.0%
c. 10.69%
d. 10.48%
e. 9.2%