Question: What is the expected return for the following stock? State Probability Return Average .55 .20 Recession .20 .10 Depression .25 -.20 0.055 = 5.50% 0.080

What is the expected return for the following stock?

State Probability Return

Average .55 .20

Recession .20 .10

Depression .25 -.20

0.055 = 5.50%

0.080 = 8.00%

0.095 = 9.50%

0.105 = 10.50%

0.110 = 11.00%

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