The Rotor Co

question 21

Multiple Choice

The Rotor Co. stock is expected to earn 14% in a recession,6% in a normal economy,and lose 4% in a booming economy. The probability of a boom is 20% while the probability of a normal economy is 55% and the chance of a recession is 25%. What is the expected rate of return on this stock?

• A) 6.00%
• B) 6.72%
• C) 6.80%
• D) 7.60%
• E) 11.33%

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