Expecting high returns, you decide to invest in the stock market. The returns will depend on various scenarios that may play out, and the two most important parameters are the growth rate of the economy and the interest rates. The following possibilities exist.

What is the expected return and risk of your investment?

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Scenario High growth/high interest High growth/low interest Low growth/high interest Low growth/low interest Expected return 15% 30% -10% 10% Probability 20% 25% 30% 25%