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Midwest Fastener Supply stock is expected to return 16 percent in a booming economy, 12 percent in a normal economy, and...

Midwest Fastener Supply stock is expected to return 16 percent in a booming economy, 12 percent in a normal economy, and −3 percent in a recession. The probabilities of an economic boom, normal state, or recession are 12 percent, 80 percent, and 8 percent, respectively. What is the expected rate of return on this stock? Pleas explain your answer.

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state of economy Returns probability Boom Normal Recession 16.00% 12.00% -3.00% Expected return 12% 80% 8% Expected return (R

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