The common stock of Lester Lithographic is expected to earn 9 percent in a recession, 7 percent

Question:

The common stock of Lester Lithographic is expected to earn 9 percent in a recession, 7 percent in a normal economy, and lose 2 percent in a booming economy. The probability of a boom is 5 percent while the probability of a recession is 50 percent. What is the expected rate of return on this stock?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...