Homework Answers
Answer:
Calculation of Expcted rate of return
| State of the economic | Probability(A) | Expected Return(B) | Rate of return(c=A*B) |
| BOOM | 0.35 | 25% | 8.75% |
| Nornal | 0.4 | 15% | 6% |
| Recession | 0.25 | 5% | 1.25% |
| Total | 16% |
Answer: 16%
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