What is the expected return on kate investment as a decimal

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Problem - Kate recently invested in real estate with the intention of selling the property one year from today. She has modelled the returns on that investment based on three economic scenarios. She believes that if the economy stays healthy, then her investment will generate a 30 percent return. However, if the economy softens, as predicted, the return will be 23 percent, while the return will be -10 percent if the economy slips into a recession. If the probabilities of the healthy, soft, and recessionary states are 0.3, 0.5, and 0.2, respectively, then what is the expected return on Kate's investment as a decimal?

Reference no: EM132988893

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