The Expected Return on a Stock Given Various States of the Economy

question 48

Multiple Choice

The expected return on a stock given various states of the economy is equal to the:

• A) highest expected return given any economic state.
• B) arithmetic average of the returns for each economic state.
• C) summation of the individual expected rates of return.
• D) weighted average of the returns for each economic state.
• E) return for the economic state with the highest probability of occurrence.