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An investor is trying to estimate his expected return on an investment in the next 12 months. He believes the economy will be one of three states: Bad, Average, or Great. He has estimated the probability of each state and the return he will get in each environment.

OUTCOME: Probability Return

BAD 0.37 -18.00%

AVERAGE 0.49 5.00%

GREAT 0.14 31.00%

Find the expected return based on his assumptions.

Answer Format: Percentage Round to: 2 decimal places (Example: 9.24%, % sign required. Will accept decimal format rounded to 4 decimal places (ex: 0.0924))

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92801304

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