Problem:
The returns of StarCups are 25% in economic boom, 10% in normal economics, and -5% in economic recessions. If the probabilities of economic boom, normal economics and economic recession are 40%, 35%, and 25% respectively,
Requirement:
Question: What is the expected return of StarCups?
- 12.25%
- 8.75%
- 9.88%
- 11.06%
Note: Please describe comprehensively and provide step by step solution.