I need help for this question. Please show me stpe by step for finding the answe

Question

I need help for this question. Please show me stpe by step for finding the answer.

You recently purchased a stock that is expected to earn 29 percent in a booming economy, 18 percent in a normal economy, and lose 5 percent in a recessionary economy. There is a 26 percent probability of a boom, a 66 percent chance of a normal economy, and a 8 percent chance of a recession. What is your expected rate of return on this stock?

A.2.38 percent

B, 14.00 percent

C. 9.51 percent

D. 19.02 percent

E. 15.67 percent

I need help for this question. Please show me stpe by step for finding the answer.

You recently purchased a stock that is expected to earn 29 percent in a booming economy, 18 percent in a normal economy, and lose 5 percent in a recessionary economy. There is a 26 percent probability of a boom, a 66 percent chance of a normal economy, and a 8 percent chance of a recession. What is your expected rate of return on this stock?

Explanation / Answer

Expected return:

= 29%×0.26+18%×0.66-5%×0.08

= 19.02%

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