(a) The article states that the 10 year average return for shares is 6.5%. Assume this...

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(a) The article states that the 10 year average return for shares is 6.5%. Assume this is the return made under "normal" market conditions, and that the return made under "bull market" conditions is 12.4%, and that the return made under "bear market" conditions is -2.6%. If the probability of normal conditions is 50%, the probability of a bull market is 40% and the probability of a bear market is 10%, calculate the expected return for shares over the next year. (b) If you need to make a return of 6.0%, should you invest in shares, or should you look for another investment? (Include enough working to show you understand the calculations.) (a) The article states that the 10 year average return for shares is 6.5%. Assume this is the return made under "normal" market conditions, and that the return made under "bull market" conditions is 12.4%, and that the return made under "bear market" conditions is -2.6%. If the probability of normal conditions is 50%, the probability of a bull market is 40% and the probability of a bear market is 10%, calculate the expected return for shares over the next year. (b) If you need to make a return of 6.0%, should you invest in shares, or should you look for another investment? (Include enough working to show you understand the calculations.)

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a To calculate the expected return for shares over the next year we need to use the weighted average ... View the full answer