Compute the Expected Return Given These Three Economic States, Their

Compute the expected return given these three economic states, their likelihoods, and the potential returns: $$\begin{array} { | l | l | l | } \hline \begin{array} { l } \text { Economic } \\\text { State }\end{array} & \text { Probability } & \text { Return } \\\hline \text { Fast Growth } & 0.2 & 23 \% \\\hline \text { Slow Growth } & 0.6 & 14 \% \\\hline \text { Recession } & 0.2 & - 30 \% \\\hline\end{array}$$

A) 3.5 percent
B) 7.0 percent
C) 7.5 percent
D) 12.5 percent

Correct Answer:

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