You find that in a normal year, the S&P500 index gives a return of 12%. However, you think that there is a 40% probability of the economy going into recession next year. If that happens, you predict that the index return will be 2%. What is the expected return on the S&P500 next year?

Answer rating: 100% (QA)

The expected return also known as the mean return is the sum of all possible ret... View the full answer