Question: Ronnie estimates that there are three possible return outcomes for a stock he is considering for purchase. He thinks that there is a45% chance the

Ronnie estimates that there are three possible return outcomes for a stock he is considering for purchase. He thinks that there is a45% chance the economy will boom and his stock will return25%, a50% chance the economy will continue at its current pace and the stock will return8%, andfinally, that there is a5% chance that the economy will falter and the expected return on his stock will be minus

10%. Given these probabilities and conditional expectedreturns, what isRonnie's expected return on the stock he is considering forpurchase?

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