Expected percentage return of investment

Question

Problem:

Assume that an investment is forecasted to produce the following returns: a 20% probability of a 12% return; a 50% probability of a 16% return; and a 30% probability of a 19% return.

Required:

Question: What is the expected percentage return this investment will produce?

• 33.3%
• 9.3%
• 16.1%
• 15.7%

Note: Provide support for your rationale.