A stock is expected to return 13 in a boom 10 in a normal


A stock is expected to return 13% in a boom, 10% in a normal, and 3% in a recessionary economy. Which will lower the overall expected return of this stock?

a. an increase in rate of return in recession
b. an increase in the probablilty of economic boom
c. a decrease in probability of recession
d. a decrease in the probability of an economic boom
e. an increase in the rate of return for normal economy

 

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Finance Basics: A stock is expected to return 13 in a boom 10 in a normal
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