Question: Expected returns Over the past 25 years, the average return for Stock ABC has been 12.43% per year. However, during booming economies, this return is

Expected returns Over the past 25 years, the average return for Stock ABC has been 12.43% per year. However, during booming economies, this return is 5% higher. On the other hand, during recessionary economies, this return is 4% lower than the average. If you believe there is an equal 25% chance of both a recession and a booming economy next year, what is your expected return on Stock ABC?

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