Southern Wear stock has an expected return of 15.1 percent. The stock is expected to lose 8 percent in a recession and earn 28 percent in a boom. The probabilities of a recession, a normal ecchomy, and a boom are 2 percent, 87 percent, and 11 percent, respectively. What is the expected return on this stock if the economy is normal? Multiple Choice 15.26% 16.43% 17.04% 14.00%
Southern Wear stock has an expected return of 15.1 percent. The stock is expected to lose 8 percent in a recession and earn 28 percent in a boom. The probabilities of a recession, a normal ecchomy, and a boom are 2 percent, 87 percent, and 11 percent, respectively. What is the expected return on this stock if the economy is normal? Multiple Choice 15.26% 16.43% 17.04% 14.00%
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![Southern Wear stock has an expected return of 15.1 percent. The stock is expected to lose 8 percent in a recession and earn 28 percent in a boom. The
probabilities of a recession, a normal ecchomy, and a boom are 2 percent, 87 percent, and 11 percent, respectively. What is the expected return on this
stock if the economy is normal?
Multiple Choice
15.26%
O 16.43%
17.04%
14.00%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4bda9b14-43b2-4e4d-a7f7-40428dd1132c%2F79653bed-62fa-4171-8a53-cbe92ec88c46%2F8w92sgh_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Southern Wear stock has an expected return of 15.1 percent. The stock is expected to lose 8 percent in a recession and earn 28 percent in a boom. The
probabilities of a recession, a normal ecchomy, and a boom are 2 percent, 87 percent, and 11 percent, respectively. What is the expected return on this
stock if the economy is normal?
Multiple Choice
15.26%
O 16.43%
17.04%
14.00%
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