You are planning to invest in a share. There are four possible returns from the share over the next year, depending on the state of the economy. List below are the four possible states of the economy, the probability of each state of the economy, and the return from the share given the state of the economy. What is the expected return from the share? State of the economy Probability Return Recession 11% -8% Average 15% 3% Good 37% 8% Booming 37% 12% O a. 8.8400% O b. 6.3800% O c. 5.7600% O d 69700%

You are planning to invest in a share. There are four possible returns from the share over the next year, depending on the state of the economy. List below are the four possible states of the economy, the probability of each state of the economy, and the return from the share given the state of the economy. What is the expected return from the share? State of the economy Probability Return Recession 11% -8% Average 15% 3% Good 37% 8% Booming 37% 12% O a. 8.8400% O b. 6.3800% O c. 5.7600% O d 69700%

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 7P

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