Expected return on the investment


You are considering buying stock A. If the economy grows rapidly, you may earn 30% on your investment, while a declining economy could result in a 20% loss. Slow economic growth may generate a return of 6%.

If the probability is 15% for rapid growth, 20% for a declining economy, and 65% for slow growth, what is the expected return on the investment?

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Finance Basics: Expected return on the investment
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