The Common Stock of Taylor & Smith Is Expected to Earn

question 216

Multiple Choice

The common stock of Taylor & Smith is expected to earn 2% in a recession, 9% in a normal economy, and 13% in a booming economy. The probability of a boom is 15% while the probability of
A normal economy is 75% and the chance of a recession is 10%. What is the expected rate of return
On this stock?

• A) 8.35%
• B) 8.52%
• C) 8.67%
• D) 8.81%
• E) 8.90%

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Definitions:

Reciprocal Obligations

Mutual responsibilities or duties exchanged between parties, where each party has an obligation to the other.

Realistic Job Preview

An accurate presentation of the potential positives and negatives of a job to prospective employees.

Socialization

The process by which individuals learn and adopt the norms, values, behaviors, and skills necessary to participate effectively in a society or organization.

PJ Fit

Person-Job Fit; the compatibility between an individual's characteristics and the requirements of a specific job.