Question

What is the expected share return given the following macro-economic probabilities? Probability of recession 20% - Share return 5%; Probability of steady state 60% - Share return 10%; Probability of boom 20% - Share return 15%
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12%
10%
7%
8%

Answer 1

The expected share return is 10%.

What is the expected share return?

Percentage is the fraction of an amount expressed as a number out of hundred. The sign used to denote percentages is %.

Probability determines the chances that an event would happen. The probability the event occurs is 1 and the probability that the event does not occur is 0. The more likely the event is to happen, the closer the probability value would be to 1. The less likely it is for the event not to happen, the closer the probability value would be to zero.

The expected share return = (0.2 x 5) + (0.6 x 10) + (0.2 x 15%)

1 + 6 + 3 = 10%

To learn more about percentages, please check: brainly.com/question/25764815

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