Exhibit 1-4
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

Exhibit 1-4
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)
You have concluded that next year the following relationships are possible: $\begin{array}{llc}\text { Economic Status } & \text { Probability } & \text { Rate of Return } \\\hline \text { Weak Economy } & .15 & -5 \% \\\text { Static Economy } & .60 & 5 \% \\\text { Strong Economy } & .25 & 15 \%\end{array}$
-Refer to Exhibit 1-4. What is your expected rate of return [E(Ri) ] for next year?

A) 4.25%
B) 6.00%
C) 6.25%
D) 7.75%
E) 8.00%