Question: Compute the expected return given these three economic states, their likelihoods, and the potential returns: Economic State Probability Return Fast Growth 0.3 40% Slow Growth

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

Economic State Probability Return

Fast Growth 0.3 40%

Slow Growth 0.4 15%

Recession 0.3 15%

  • 13.5 percent
  • 22.5 percent
  • 18.3 percent
  • 40.0 percent

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