The stock of Uptown Men\'s Wear is expected to produce the following returns giv

Question

The stock of Uptown Men's Wear is expected to produce the following returns given the various states of the economy. What is the expected return on this stock?

State of economy           Probability of state           Rate of return  

Recession                                0.20                             -0.10

Normal                                    0.65                             0.17

Boom                                      0.15                             0.22

a. 12.16 percent
b. 12.24 percent
c. 12.35 percent
d. 12.46 percent
e. 12.53 percent

Explanation / Answer

c. 12.35 percent

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