1. Calculate the expected return for a stock, given the following information about its returns in different states of the economy.
| State of economy | Probability | Stock return |
|---|---|---|
| Recession | 0.16 | -0.16 |
| Normal | 0.41 | 0.14 |
| Boom | -- | 0.27 |
Enter return in percents, not in decimals.
Ans 14.79%
| State | Probability | Return | Return * Probability |
| Recession | 16% | -16% | -2.56% |
| Normal | 41% | 14% | 5.74% |
| Boom | 43% | 27% | 11.61% |
| Total | 14.79% |
1. Calculate the expected return for a stock, given the following information about its returns in...