= Homework: Assignment 3 Question 5, B8-1 (book/static) Part 1 of 2 HW Score: 32%, 32 of 100 points O Points: 0 of 10 Save (Related to Checkpoint 8.1) (Expected rate of return) James Fromholtz is considering whether to invest in a newly formed investment fund. The fund's investment objective is to acquire home mortgage securities at what it hopes will be bargain prices. The fund sponsor has suggested to James that the funds performance will hinge on how the national economy performs in the coming year. Specifically, he suggested the following possible outcomes: a. Based on these potential outcomes, what is your estimate of the expected rate of return from this investment opportunity? b. Would you be interested in making such an investment? Note that you lose all your money in one year if the economy collapses into the worst state or you double your money if the economy enters into a rapid expansion. a. The expected rate of return from this investment opportunity is 20.58% (Round to two decimal places) - X Data table | State of Economy Probability Rapid expansion and recovery 5% Modest growth 45% Continued recession 45% Falls into depression 5% (Click on the icon in order to copy its contents into a spreadsheet.) Fund Returns 100% 35% 5% - 100% Print Done View an example Etext pages Get more help ( Clear all Check