Expected rate of return

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Question

The Inferior Goods Co. stock is expected to earn 14% in a recession, 6% in a normal economy, and lose 4% in a booming economy. The probability of a boom is 20% while the probability of a normal economy is 55% and the chance of a recession is 25%. What is the expected rate of return on this stock? Jan 21 2014 03:42 AM

 

Solution ID:609057 | This paper was updated on 26-Nov-2015

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