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%

Assess the impact of compounding frequency on investment growth or decline.

Understand the concept of total return from an investment, including income and capital gains yields.

Perform break-even analysis on investments after experiencing gains and losses.

Understand how to calculate income yield from an investment.

---

Definitions:

Sec-butyl

A radical or substituent derived from butane by removing a hydrogen atom from a secondary carbon, specifically the 2nd position.

IUPAC Name

The recommended approach for naming chemical compounds by the International Union of Pure and Applied Chemistry.

Bromoethyl

A two-carbon ethyl group attached to a bromine atom, often used in organic synthesis for reactions involving alkylation.

IUPAC Name

The methodical labeling of chemical compounds following the guidelines set by the International Union of Pure and Applied Chemistry.