Midwest Fastener Supply Stock Is Expected to Return 16 Percent

Midwest Fastener Supply stock is expected to return 16 percent in a booming economy, 12percent in a normal economy, and -3 percent in a recession.The probabilities of an economic boom, normal state, or recession are 12 percent, 80 percent, and 8 percent, respectively.What is the expected rate of return on this stock?

A) 11.28 percent
B) 10.67 percent
C) 10.95 percent
D) 11.91 percent
E) 11.70 percent

Correct Answer:

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