FIN 571

Barbara is considering investing in a stock and is aware that the return on that investment is particularly sensitive to how the economy is performing. Her analysis suggests that four states of the economy can affect the return on the investment. Using the table of returns and probabilities below, find

  Probability Return

Boom 0.6 25.00%
Good 0.2 15.00%
Level 0.1 10.00%
Slump 0.1 -5.00%


What is the expected return on Barbara’s investment? (Round answer to 3 decimal places, e.g. 0.076.)

Expected return   [removed]  

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