1. Expected Return Compute the expected return given these three economic states, their likelihoods, and the potential returns:
Economic State Probability Return
Fast Growth .2 30.8 %
Slow Growth .5 6.40 %
Recession .3 -2.40 %
Multiple Choice
17.4%
10.1%
19.8%
8.6%
2. Expected Return Compute the expected return given these three economic states, their likelihoods, and the potential returns:
Economic State Probability Return
Fast Growth .1 18 %
Slow Growth .8 11 %
Recession .1 -26 %
Multiple Choice
9.7%
3.0%
13.2%
8.0%