Question 1 (1 point) Calculate the expected return on stock of Gamma Inc.: State of the economy Probability of the states Percentage returns Economic recession 30% -4.2% Steady economic growth 37% 3.5% Boom Please calculate it 13.4% Round the answers to two decimal places in percentage form. (Write the percentage sign in the "units" box)

The probability of boom state = 1 - 0.30 - 0.37 = 0.33 Expected return on stock = 0.30 -0.042 + 0.37 0.035 + 0.33 0.134 Expected return on stock of Gamma Inc = 4.46 %

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Question 1 (1 point) Calculate the expected return on stock of Gamma Inc

Finance Oct 23, 2020

Question 1 (1 point)

Calculate the expected return on stock of Gamma Inc.:

State of the economy	Probability of the states	Percentage returns
Economic recession	30%	-4.2%
Steady economic growth	37%	3.5%
Boom	Please calculate it	13.4%

Round the answers to two decimal places in percentage form. (Write the percentage sign in the "units" box)

Expert Solution

The probability of boom state = 1 - 0.30 - 0.37 = 0.33

Expected return on stock = 0.30 $\times$ -0.042 + 0.37 $\times$ 0.035 + 0.33 $\times$ 0.134

Expected return on stock of Gamma Inc = 4.46 %

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