Crabby Shores Stock Is Expected to Return 16 Percent in a Booming

question 26

Multiple Choice

Crabby Shores stock is expected to return 16 percent in a booming economy, 11.5 percent in a normal economy, and 1.8 percent in a recession.The probabilities of an economic boom, normal state, or recession are 6 percent, 85 percent, and 9 percent, respectively.What is the expected rate of return on this stock?

• A)8.96 percent
• B)9.63 percent
• C)9.50 percent
• D)10.90 percent
• E)7.57 percent

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Definitions:

Molasses Solution

A liquid mixture made by dissolving molasses, which is a thick, sweet by-product of sugar processing, in water.

Selectively Permeable Membrane

A membrane that allows certain molecules or ions to pass through it by diffusion and occasionally specialized processes.

Distilled Water

Water that has been boiled into vapor and condensed back into liquid, removing impurities and minerals.

Mitochondria

Membrane-bound organelles found in the cytoplasm of almost all eukaryotic cells, essential for producing energy via the process of oxidative phosphorylation.