You Recently Purchased a Share That Is Expected to Earn

question 105

Multiple Choice

You recently purchased a share 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 share?

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

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