Suppose a stock with the ticker name ABCD will earn a 20% return if next year is a boom year, an 8% return if it is a neutral year, and a -30% return if it is a recession year. The probability that next year will be a boom year is 25%, 35% that it will be a neutral year, and 40% that it will be a recession year. Should you invest in ABCD? Why or why not?

Answer rating: 100% (QA)

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