Problem:

You recently purchased a stock that is expected to earn 22 percent in a booming economy, 11 percent in a normal economy, and lose 4 percent in a recessionary economy. There is a 24 percent probability of a boom, a 67 percent chance of a normal economy, and a 9 percent chance of a recession.

Required:

Question: What is your expected rate of return on this stock?

• 6.14 percent
• 11.00 percent
• 12.29 percent
• 9.67 percent
• 3.45 percent

Note: Please provide full description.