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snow_tiger [21]
3 years ago
11

Pl lumber stock is expected to return 22 percent in a booming economy, 15 percent in a normal economy, and lose 2 percent in a r

ecession. the probabilities of an economic boom, normal state, or recession are 5 percent, 92 percent, and 3 percent, respectively. what is the expected rate of return on this stock?
Business
1 answer:
LekaFEV [45]3 years ago
3 0
                    Expected rate of return           Probabilities
Booming                22%                                    5%
Normal                  15%                                   92%
Recession               2%                                     3%

The expected rate of return on this stock is solved by multiply each expected rate of return to its corresponding probability and getting the sum of all products.

Booming: 0.22 x 0.05 =  0.011
Normal:   0.15 x  0.92 = 0.138
Recession 0.02 x 0.03 =<u> 0.0006</u>
Sum total                     0.1496  or 14.96% is the expected rate of return on this stock

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Six months ago, Benders Gym repurchased $140,000 of its common stock. The company pays regular dividends totaling $18,500 per qu
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Answer:

$168,400

Explanation:

Benders Gym repurchased their common stock at the rate of $140,000

Benders Gym pays a regular dividend of $18,500 four times in a year

For a period of one year 1,200 shares was issued at the rate of $38 per share

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