Question: 1. What is the expected return on this stock given the following information? State of the Economy Probability E(R) Boom 0.4 14% Recession 0.6 -18%

1. What is the expected return on this stock given the following information?

State of the Economy

Probability

E(R)

Boom

0.4

14%

Recession

0.6

-18%

A) -8.07 percent

B) -7.69 percent

C) -6.80 percent

D) -5.70 percent

E) -5.20 percent

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