What is expected return on stock-considering for purchase

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Reference no: EM13834935

Ronnie estimates that there are three possible return outcomes for a stock he is considering for purchase. He thinks there is a 25% chance the economy will boom and his stock will return 25%, a 50% chance the economy will continue at its current pace and the stock will return to 8%, and finally, that there is a 25% chance that the economy will falter and the expected return on his stock will be 0%. Given these profabilities and conditional expected returns, what is ronnies expected return on the stock he is considering for purchase.

Reference no: EM13834935

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