Suppose you own a stock that you believe will produce a return of 13% in a good economy and 4% in a poor economy. Given the probabilities of each state of the economy occurring, you think that your stock will earn 8.0% next year. Which one of the following terms does this 8% describe?
A) Arithmetic return
B) Expected return
C) Historical return
D) Required return
E) Geometric return
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Home » Business » Suppose you own a stock that you believe will produce a return of 13% in a good economy and 4% in a poor economy. Given the probabilities of each state of the economy occurring, you think that your stock will earn 8.0% next year.