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Junkers stock is expected to return 12.7 percent in a normal economy, -18.4 percent in a recessionary economy, and 23.6 percent in a booming economy....


Junkers stock is expected to return 12.7 percent in a normal economy, -18.4 percent
in a recessionary economy, and 23.6 percent in a booming economy. The probability of a boom is 8 percent
and the probability of a recession is 22 percent. What is the expected rate of return on this stock?












Student Response

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A.

6.73 percent





B.

8.21 percent





C.

8.57 percent





D.

10.22 percent






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0/10

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Finance-8099745.doc

Junkers stock is expected to return 12.7 percent in a normal economy, ­18.4 percent in a recessionary economy, and 23.6 percent in a booming economy. The probability of a boom is 8 percent and the...

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