What Is the Expected Return on This Stock Given the Following

What is the expected return on this stock given the following information?
$\begin{array}{lcc}\text { State of the Economy } & \text { Probability of } & \text { Rate of Return if } \\& \text { State of Economy } & \text { state occurs }\\\text { Boom } & .05 & 16 \% \\\text { Normal } & .45 & 7 \% \\\text { Recession } & .50 & -12 \%\end{array}$

A) 2.05%
B) 1.08%
C) .47%
D) 1.22%
E) 1.43%

Correct Answer:

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