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Take a Test Secure | https://www.rmatholoonStudent/PlayerTest.aspx?testidel 728 centerwinzyes Principles of Business Finencene Test: Exam 2 Time Remaining: 02:3804 Submit Test This Question: 1 pt 30of41(7conglete ) This Test: 41 pts possibie You are considering investing in a firm that has the following possible outcomes Economic boom probablity of 25%, return of 25% Economic growth probabilty of 60%, return of 15% Economic decine probablity of 1S% return of-5% What is the expected rate of return on the investment? OA. OB. 11 7% 145% C. 25.0% D. 150%

Explanation / Answer

Answer is B

Particulars Weight Probability Expected Return Boom 25%                         0.25 6.25% Growth 15%                         0.60 9.00% Decline -5%                         0.15 -0.75% Total                         1.00 14.50%

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