1 the economy will recover with probability 03 stagnate, Ask an Expert

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1. The economy will recover (with probability 0.3), stagnate (with probability 0.5), or enter a depression. A stock will return 35% if the economy recovers, 4% if stagnation, and -40% if depression. What is the expected return of the stock?

2. Why do you suppose the taxes on installment sales are permitted to be deferred? Does this provision seem to represent good public policy? Why or why not?

3. Assume you invest $1,000 today when the consumer price index (CPI) is 140. What is your REAL rate of return if you have 1,438 in 5 years and the CPI is 187?

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Financial Management, Finance

Category:- Financial Management
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