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%

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Definitions:

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An international terrorist organization founded by Osama bin Laden, responsible for numerous attacks, including the September 11, 2001 attacks on the United States.

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An American lawyer and academic who gained national attention in 1991 when she accused U.S. Supreme Court nominee Clarence Thomas of sexual harassment.