Question

Consider the following information: State of Economy Recession Boom Probability of State of Economy .29 .71 Rate of Return if State Occurs -.09 .21 Calculate the expected return. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Expected return 0 %

Answer 1

Ans 12.30%

STATE OF ECONOMY	Probability (P)	RETURN (Y)	(P * Y )
RECESSION	29%	-9	-2.61
BOOM	71%	21	14.91
		TOTAL	12.30
Expected Return =		(P * Y)
		12.30%