We estimate that there will be two states of the economy, boom and bust, in the next period, with probability of 30% and 70%, respectively. We also estimate that the return on Stock A will be 50% in...



We estimate that there will be two states of the economy, boom and bust, in the next period, with probability of 30% and 70%, respectively. We also estimate that the return on Stock A will be 50% in the boom state and -10% in the bust state. What is the expected return on Stock A?




Multiple Choice




  • 6%





  • 9%





  • 10%





  • 7%





  • 8%






Jun 10, 2022
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