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The common stock of Low Cost Foods is expected to earn 12 percent in a...

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Accounting

The common stock of Low Cost Foods is expected to earn 12 percent in a booming economy, earn 7 percent in a normal economy, and lose 5 percent in a recession. The probability of a boom is 15 percent, the probability of a normal economy is 80 percent, and the chance of a recession is 5 percent. What is the expected rate of return on this stock?

Group of answer choices

7.65 percent

7.15 percent

7.10 percent

7.25 percent

4.67 percent

Answer & Explanation Solved by verified expert
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