Question: Calculate the expected return for two possible outcomes for the economy next year: recession and recovery Suppose for this example that we forecast a 67%

Calculate the expected return for two possible outcomes for the economy next year: recession and recovery

Suppose for this example that we forecast a 67% chance of recession over the next year

Lets suppose that we forecast that in a recession the firms return will be 7.82% and that in recovery the firms return will be 29.80%

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