You Are Considering Investing in a Project with the Following

question 22

Multiple Choice

You are considering investing in a project with the following possible outcomes: Probability of Investment
States Occurrence Returns
State 1: Economic boom 15% 16%
State 2: Economic growth 45% 12%
State 3: Economic decline 25% 5%
State 4: Depression 15% -5%
Calculate the expected rate of return for this investment.

• A) 9.8%
• B) 7.0%
• C) 8.3%
• D) 6.3%

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