Compute the Expected Return Given These Three Economic States, Their

question 62

Multiple Choice

Compute the expected return given these three economic states, their likelihoods, and the potential returns:
$$\begin{array}{l}\begin{array} { c c r } \text { Eccrorric State }&\text { Probability } & \text { Return } \\\text { fast growth }&0.1 & 50 \% \\\text {slow growth }&0.6 & 8\% \\\text { recession }&0.3 & - 10\%\end{array}\end{array}$$

• A) 6.8 percent
• B) 12.8 percent
• C) 16.0 percent
• D) 22.7 percent

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