Given the Expected Returns and Probabilities of Various States of the World

question 20

Multiple Choice

Given the expected returns and probabilities of various states of the world in this table,what is the expected return for Dancine Company? Dancine Company $$\begin{array} { | l | c | c | } \hline \text { State of the Economy } & \text { Probability of State } & \text { Return on State } \\\hline \text { Boom } & .30 & 18 \% \\\hline \text { Steady } & .55 & 10 \% \\\hline \text { Recession } & .15 & - 5 \% \\\hline\end{array}$$

• A)9.45%
• B)12.40%
• C)10.15%
• D)-0.75%

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