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Determine the expected return on dorothy investment

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Reference no: EM132994040

Question - Dorothy is considering investing in a company's stock and is aware that the return on that investment is particularly sensitive to how the economy is performing. Her analysis suggests that four states of the economy can affect the return on the investment.

 

Probability

Return

Boom

0.4

25.00%

Good

0.3

15.00%

Level

0.2

10.00%

Slump

0.1

-5.00%

Use the table of returns and probabilities above to determine the expected return on Dorothy's investment?

Reference no: EM132994040

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