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CHAPTER 11 Risk and Return beta? Who set? Can a Case ulating Expected Return. Based on the following information, calculate t
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Answer #1

Expected Return = Prob of Recession * Return of Recession + Prob of Normal * Return of Normal + Prob of Boom * Return of Boom  

= 0.15 * (-0.09) + 0.60 * 0.11+ 0.25 * 0.30

= 0.1275 OR 12.75%

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