Question: answer: a. 8.67% b. 8.35% c. 8.81% d. 8.52% e. 8.90% The common stock of Taylor & Smith is expected to earn 2% in a

answer: a. 8.67% b. 8.35% c. 8.81% d. 8.52% e. 8.90%

answer:

a. 8.67% b. 8.35% c. 8.81% d. 8.52% e. 8.90%

The common stock of Taylor & Smith is expected to earn 2% in a recession, 9% in a normal economy, and 13% in a booming economy. The probability of a boom is 15% while the probability of a normal economy is 75% and the chance of a recession is 10%. What is the expected rate of return on this stock? Multiple Choice 8.67% O 8.35% 8.81%

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