The Common Stock of Manchester & Moore Is Expected to Earn

question 61

Multiple Choice

The common stock of Manchester & Moore is expected to earn 13 percent in a recession,6 percent in a normal economy,and lose 4 percent in a booming economy.The probability of a boom is 5 percent while the probability of a recession is 45 percent.What is the expected rate of return on this stock?

• A)8.52 percent
• B)8.74 percent
• C)8.65 percent
• D)9.05 percent
• E)9.28 percent

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