Use the following information on states of the economy and stock returns to calc
ID: 2778307 • Letter: U
Question
Use the following information on states of the economy and stock returns to calculate the expected return for Dingaling Telephone: (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)
Use the following information on states of the economy and stock returns to calculate the expected return for Dingaling Telephone: (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)
Explanation / Answer
Expected Return for Dingaling Telephone = weighted Sum = 5.73
State of Economy Probability of State economy (A) Security Returns if State occurs (B) Weighted Return (A*B*100) Recession 0.35 -7.50% -2.625 Normal 0.2 8% 1.6 Boom 0.45 15% 6.75 WEIGHTED SUM 5.73