The Inferior Goods Co

question 11

Multiple Choice

The Inferior Goods Co.stock is expected to earn 13% in a recession,7% in a normal economy,and lose 6% 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)5.00%
• B)5.90%
• C)6.80%
• D)7.60%
• E)11.33%

---

Definitions:

Social Media Networks

Online platforms that enable users to create content, share media, and develop social and professional contacts.

Insurable Interest

A principle requiring that a person purchasing insurance has a vested interest in the item or life being insured.

Double Chocolate Bars

Confectionery items that incorporate chocolate in at least two forms, such as chocolate coating and chocolate filling.

Confection Corporation

A business entity specialized in the production and sale of sweets and chocolates.