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i Safari File Edit View History Bookmarks Window Help @ , 45%Wed Dec 6 18:23 a E ezto.mheducation.com CH 11 Consider The Following In State Of Econo... Chegg.com CH 11 instructions I help Question 6 (of 8) save & Exit | Submit 6 1.50 points Problem 11-6 Calculating Expected Return [LO1] Consider the following information: Probability of State of Economy 16 49 35 Rate of Return if State Occurs 13 15 34 State of Economy Normal Boom Calculate the expected retum. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Expected return References eBook &Resources; Difficulty: 1 Basic Section: 11.1 Expected Retums and Variances Learning Objective: 11-01 Calculate expected Problem 11-6 Calculating Expected Return [LO 1] 6

Explanation / Answer

Expected return=Respective returns*Respective probabilties

=(0.16*-0.13)+(0.49*0.15)+(0.35*0.34)

which is equal to

=17.17%

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