Use the following information on states of the economy and stock returns to calc

Question

Use the following information on states of the economy and stock returns to calculate the expected return for Dingaling Telephone: (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

Use the following information on states of the economy and stock returns to calculate the expected return for Dingaling Telephone: (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

Explanation / Answer

Expected Return for Dingaling Telephone = weighted Sum = 5.73

State of Economy Probability of State economy (A) Security Returns if State occurs (B) Weighted Return (A*B*100) Recession 0.35 -7.50% -2.625 Normal 0.2 8% 1.6 Boom 0.45 15% 6.75 WEIGHTED SUM 5.73

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