Consider the following information:State of EconomyRecessionNormalBoomProbability of State Rate of Return ifState Occursof EconomyExpected return.10.60.30Calculate the expected return.Note: Do not round intermediate calculations and enter your answer as a percentrounded to 2 decimalplaces,e.g., 32.16.-.17.08.27%

Probability Rate of Return0.21-0.120.480.140.310.33

Answered: Consider the following information:…

Consider the following information: State of Economy Recession Normal Boom Probability of State Rate of Return if of Economy State Occurs Calculate the expected return. .10 .60 .30 -.17 .08 .27

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

Consider the following information:
State of Economy
Recession
Normal
Boom
Probability of State Rate of Return if
State Occurs
of Economy
Expected return
.10
.60
.30
Calculate the expected return.
Note: Do not round intermediate calculations and enter your answer as a percentrounded to 2 decimalplaces,e.g., 32.16.
-.17
.08
.27
%

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