Question: 1. Expected Return Compute the expected return given these three economic states, their likelihoods, and the potential returns: Economic State Probability Return Fast Growth .2

1. Expected Return Compute the expected return given these three economic states, their likelihoods, and the potential returns:

Economic State Probability Return
Fast Growth .2 30.8 %
Slow Growth .5 6.40 %
Recession .3 -2.40 %

Multiple Choice

  • 17.4%

  • 10.1%

  • 19.8%

  • 8.6%

2. Expected Return Compute the expected return given these three economic states, their likelihoods, and the potential returns:

Economic State Probability Return
Fast Growth .1 18 %
Slow Growth .8 11 %
Recession .1 -26 %

Multiple Choice

  • 9.7%

  • 3.0%

  • 13.2%

  • 8.0%

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