You Have Been Given This Probability Distribution for the Holding-Period

question 25

Multiple Choice

You have been given this probability distribution for the holding-period return for GM stock: $\begin{array}{lcc} \text { Stock of the Economy } & \text { Probability} & \text {HPR } \\ \text { Boom } &0.40&30\%\\ \text { Normal growth } &0.40&11\%\\\text { Recession }&0.20&-10\%\end{array}$


What is the expected holding-period return for GM stock?

• A) 10.4%
• B) 11.4%
• C) 12.4%
• D) 13.4%
• E) 14.4%

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Definitions:

Connective

In formal logic, an operator that combines propositions to form a new proposition with a truth value derived from the original propositions.

Consistent

Marked by harmony, regularity, or steady continuity; free from contradiction.

Truth Tables

A table used in logic to determine whether a proposition is true or false for all possible logical variable combinations.

Conjunction

A logical operator that connects two statements or propositions, where the truth of both is required for the entire statement to be true.