You Recently Purchased a Stock That Is Expected to Earn

question 69

Multiple Choice

You recently purchased a stock that is expected to earn 15 percent in a booming economy,9 percent in a normal economy and lose 5 percent in a recessionary economy.There is a 15 percent probability of a boom,a 75 percent chance of a normal economy,and a 10 percent chance of a recession.What is your expected rate of return on this stock?

• A)8.00%
• B)7.45%
• C)8.50%
• D)7.75%
• E)9.50%

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Definitions:

Termination

Termination refers to the process of ending or concluding something, such as a project, employment, or service.

Risk Management

The identification, assessment, and prioritization of risks followed by coordinated efforts to minimize, monitor, and control the probability or impact of unforeseen events.

Interactive Nurturing

A process of fostering growth or development in someone through engaging, supportive, and reciprocal interactions.

DSM-5

The Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition, a comprehensive classification and diagnostic tool for mental disorders used by healthcare professionals.