You Recently Purchased a Stock That Is Expected to Earn

question 20

Multiple Choice

You recently purchased a stock that is expected to earn 12% in a booming economy,8% in a normal economy and lose 5% in a recessionary economy. There is a 15% probability of a boom,a 75% chance of a normal economy,and a 10% chance of a recession. What is your expected rate of return on this stock?

• A) 5.00%
• B) 6.45%
• C) 7.30%
• D) 7.65%
• E) 8.30%

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Definitions:

Social Isolation

A state in which an individual lacks a sense of social belonging, true engagement with others, and fulfilling relationships.

Obsessive-Compulsive Disorder

A mental disorder characterized by recurrent, unwanted thoughts (obsessions) and repetitive behaviors (compulsions).

Obsessive-Compulsive Personality Disorder

A mental disorder identified by an ongoing obsession with being orderly, perfect, and in control of both one's own thoughts and relationships, sacrificing adaptability, openness, and effectiveness in the process.

Order

The arrangement or disposition of people, items, or concepts in relation to each other following a particular sequence, pattern, or method.