Instruction: - The solution to each question should include detailed calculation steps and (or) explain why you choose that answer. No any step means ZERO point.

You have been given this probability distribution for the holding period return for XYZ stock:

State of the Economy	Probability	HPR (%)
Boom	0.30	18
Normal Growth	0.50	12
Recession	0.20	-5

7. What is the expected holding period return for XYZ stock?

A) 11.67%

B) 8.33% ADMN3700 3

C) 10.4%

D) 12.4%

E) 7.88%