Question: Problem 11-4 Expected Returns (LO1, CFA1) Security Returns if State Occurs State of Economy Bust Boom Probability of State of Economy 0.40 0.60 Roll -15%

 Problem 11-4 Expected Returns (LO1, CFA1) Security Returns if State Occurs

Problem 11-4 Expected Returns (LO1, CFA1) Security Returns if State Occurs State of Economy Bust Boom Probability of State of Economy 0.40 0.60 Roll -15% Ross 15% Calculate the expected returns for Roll and Ross by filling in the following table: (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Calculate the product using the decimal value of the probability and the percentage value of the return. Input all your answers as a percent rounded to 2 decimal places.) Roll Ross Probability of State of Economy State of Economy Return if State Occurs Return if State Occurs Product Product (15) % 22% E(R)- 15% 51% E(R)-s Bust 0.40 Boom 0.60 7.20 9.00

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