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4 January, 16:05

The common stock of Manchester & Moore is expected to earn 17 percent in a recession, 7 percent in a normal economy, and lose 8 percent in a booming economy. The probability of a boom is 15 percent while the probability of a recession is 5 percent. What is the expected rate of return on this stock?

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  1. 4 January, 16:34
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    17*5%

    7% * (100%-5%-15%)

    - 8%*15%

    Explanation:

    Calculate the above, sum the total, and that's the expected rate of return.
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