You Recently Purchased a Stock That Is Expected to Earn

question 154

Multiple Choice

You recently purchased a stock that is expected to earn 19% in a booming economy, 11% in a normal economy and lose 15% in a recessionary economy. There is a 20% probability of a boom, a 65% chance of a normal economy, and a 15% chance of a recession. What is your expected rate of return on this stock?

• A) 6.8%
• B) 7.4%
• C) 8.7%
• D) 11.6%
• E) 13.2%

---

Definitions:

Recent Research

Studies, experiments, or analyses that have been conducted in the near past, contributing to the current knowledge in a field.

Gender

Socially constructed roles, behaviors, expressions, and identities of girls, women, boys, men, and gender diverse people.

Math Aptitude

The natural ability or skill in performing mathematical tasks and understanding mathematical concepts.

Social Skills

The abilities necessary for effective interpersonal behavior and communication, such as empathy, cooperation, and conflict resolution.