Billy is considering an investment in Pollard\'s Inc. and has gathered the follo

Question

Billy is considering an investment in Pollard's Inc. and has gathered the following information. What is the expected

return for a share of the firm's stock?

State of the Economy           Probability of the State                                              Conditional Expected Return

Recession                                         .20                                                                                     -10%

Steady                                              .50                                                                                       10%

Boom                                               .30                                                                                       45%

Explanation / Answer

16.50%

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