Answer:
um idk but thanks for the points
Answer:
8.65%
Step-by-step explanation:
Given information:
Recession Return = 13%
Normal Return = 6%
Boom Return = -4%
Probability of a recession = 45 %
Probability of a boom = 5 %
Probability of a normal = 100 - 45 - 5 = 50%
We need to find the expected rate of return on this stock.
Expected rate of return is the sum of products of probability and returns of each state of economy.
Expected rate of return
Therefore, the expected rate of return on this stock is 8.65%.
Very interesting wording but from what I gathered, scaling down by a factor of 1/10 would be 64- 6.4(1/10 of 64) so your final answer would be 57.6
Hope this explanation helps ;)