Assume the economy can either be booming or in recession


Assume the economy can either be booming or in recession. The probability of a boom is 58%. If the economy is booming, a certain stock has an expected return of 17%. If the economy is in recession, the expected return of that same stock is 5%. What is the long term expected return of the stock?

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Financial Management: Assume the economy can either be booming or in recession
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