A stock has an expected return of 10.23 percent. Based on the following information, what is the stock's return in a boom state of the economy? State of Economy Probability of State of Economy Rate of Return if State Occurs Recession .24 − 9.2 % Normal .45 10.7 % Boom .31 ?
A stock has an expected return of 10.23 percent. Based on the following information, what is the stock's return in a boom state of the economy? State of Economy Probability of State of Economy Rate of Return if State Occurs Recession .24 − 9.2 % Normal .45 10.7 % Boom .31 ?
Chapter7: Valuation Of Stocks And Corporations
Section7.4: Valuing Common Stocks
Problem 3ST
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A stock has an expected return of 10.23 percent. Based on the following information, what is the stock's return in a boom state of the economy?
State of Economy | Probability of State of Economy |
Rate of Return if State Occurs |
||
Recession | .24 | − | 9.2 | % |
Normal | .45 | 10.7 | % | |
Boom | .31 | ? | ||
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