What Is the Expected Return on This Stock Given the Following

question 65

Multiple Choice

What is the expected return on this stock given the following information?
$\begin{array}{lcr}\text { State of the Economy } & \text { Probability } & E(R) \\\text { Boom } & .7& 12 \% \\\text { Recession } & .3 & 8\%\end{array}$

• A)6.00% .
• B)2.00%
• C)0%
• D)2.00%.
• E)6.00%

---

Definitions:

Roth Retirement Plan

A type of retirement account that allows qualified withdrawals on a tax-free basis, provided certain conditions are met.

Withdrawals

The act of taking money out of an account.

Tax Free

Refers to financial income or accounts that are not subject to taxation by the government, often used to encourage specific investments or savings.

Variable Annuity

A type of annuity plan that allows the contract owner to choose investments which then dictate the fluctuation of the payout amounts.