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There is a 5 percent probability of a boom and a 70 percent

You recently purchased 100 shares of Diversified Industries, Inc. Diversified Industries is expected to earn 16 percent in a booming economy, 8 percent in a normal economy, and lose 18 percent in a recessionary economy. There is a 5 percent probability of a boom and a 70 percent chance of a normal economy. What is your expected rate of return on your Diversified Industries' stock?

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Finance Basics: There is a 5 percent probability of a boom and a 70 percent

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