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You own stock with an overall expected return of 18.32 percent. The economy is expected to...

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Finance

You own stock with an overall expected return of 18.32 percent.The economy is expected to either boom or be normal. There's a 65percent chance the economy will boom. If the economy booms, thestock is expected to return 23 percent. What's the expected returnon the stock if the economy is normal?

A. 8.51%

B. 9.63%

C. 11.84%

D. 10.25%

Please show work.

Answer & Explanation Solved by verified expert
4.4 Ratings (667 Votes)
Solution As per the information given in the question we have A stock has an overall expected return of 1832 Chance Probability that the economy will boom 65 065 Expected Return on the stock if    See Answer
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Transcribed Image Text

You own stock with an overall expected return of 18.32 percent.The economy is expected to either boom or be normal. There's a 65percent chance the economy will boom. If the economy booms, thestock is expected to return 23 percent. What's the expected returnon the stock if the economy is normal?A. 8.51%B. 9.63%C. 11.84%D. 10.25%Please show work.

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