A Stock Is Expected to Return 11% in a Normal

question 71

Multiple Choice

A stock is expected to return 11% in a normal economy,19% if the economy booms,and lose 8% if the economy moves into a recessionary period.Economists predict a 65% chance of a normal economy,a 25% chance of a boom,and a 10% chance of a recession.What is the expected return on the stock?

• A) 11.10%
• B) 12.06%
• C) 11.98%
• D) 11.23%

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Definitions:

MRP

Material Requirements Planning is a system for calculating the materials and components needed to manufacture a product.

Productivity

The measure of how efficiently inputs are converted into outputs in a production process.

Residential Use

Pertains to property or resources utilized for dwelling purposes, including houses and apartments designed for people to live in.

Commercial Use

The use of products, services, or information for business purposes or financial gain, as opposed to personal or educational use.