Rosita Owns a Stock with an Overall Expected Return of 14.40

question 46

Multiple Choice

Rosita owns a stock with an overall expected return of 14.40%. The economy is expected to either boom or be normal. There is a 52% chance the economy will boom. If the economy booms, this stock is expected to return 15%. What is the expected return on the stock if the economy is normal?

• A)12.00%
• B)12.83%
• C)13.15%
• D)13.75%
• E)14.40%

---

Definitions:

Retina

The light-sensitive layer of tissue at the back of the eye that captures images and sends visual information to the brain.

Light Sensitive

Refers to an organism or material that reacts to or is affected by the presence or intensity of light.

Statocysts

Sensory organs found in invertebrates that help to maintain equilibrium and balance.

Aquatic Amphibians

Amphibians that live in water at least during part of their life cycle, often possessing adaptations like gills for underwater respiration.