GenLabs Has Been a Hot Stock the Last Few Years

question 115

Multiple Choice

GenLabs has been a hot stock the last few years, but is risky. The expected returns for GenLabs are highly dependent on the state of the economy as follows:
$\begin{array} { l l l } \underline{\text { State of Economy }} & \underline{\text { Probability }} & \underline{ \text { GenLabs Returns } }\\ \text { Depression } & . \mathbf { 0 5 } & \mathbf { - 5 0 \% } \\\text { Recession } & .10 & \mathbf { - 1 5 \% } \\\text { Mild Slowdown } & .20 & \mathbf { 5 \% } \\\text { Normal } & .30 & \mathbf { 1 5 \% } \\\text { Broad Expansion } & .20 & \mathbf { 2 5 } \% \\\text { Strong Expansion } & .15 & \mathbf { 4 0 \% }\end{array}$
-The expected return on GenLabs is:

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