A Stock Is Projected to Return 15% During Economic Booms

question 2

Multiple Choice

A stock is projected to return 15% during economic booms, -4% during recessions and 8% otherwise. If reports indicate the probability of a boom has decreased what would happen to the stock's expected return?

• A) There would be no change to the expected return.
• B) The expected return would increase.
• C) The expected return would decrease.
• D) The expected return would increase or remain constant.
• E) The expected return would decrease or remain constant.

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Definitions:

Insurance Premiums

The amount of money that individuals or businesses pay for an insurance policy to remain active.

Deductible

An amount that must be paid out of pocket by the policyholder before an insurance company will cover a claim.

Medical Bills

The invoices and financial charges generated for services rendered by health care providers, hospitals, and clinics.

Insurance Premiums

The amount paid periodically to an insurance company by the insured for coverage under an insurance policy.