You recently purchased a stock that is expected to earn 21 percent in a booming economy, 16 percent in a normal economy, and lose 5 percent in a recessionary economy. There is a 20 percent probability of a boom, a 65 percent chance of a normal economy, and a 15 percent chance of a recession. What is your expected rate of return on this stock?
- 3.13 percent
- 6.92 percent
- 10.67 percent
- 12.33 percent
- 13.85 percent