Ronnie estimates that there are three possible return outcomes for a stock he is considering for purchase.He thinks that there is a 45% chance the economy will boom and his stock will return 25%,a 50% chance the economy will continue at its current pace and the stock will return 8%,and finally,that there is a 5% chance that the economy will falter and the expected return on his stock will be -10%.Given these probabilities and conditional expected returns,what is Ronnie's expected return on the stock he is considering for purchase?

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The Answer of Ronnie estimates that there are three possible return outcomes for a stock he is considering for purchase.He thinks that there is a 45% chance the economy will boom and his stock will return 25%,a 50% chance the economy will continue at its current pace and the stock will return 8%,and finally,that there is a 5% chance that the economy will falter and the expected return on his stock will be -10%.Given these probabilities and conditional expected returns,what is Ronnie's expected return on the stock he is considering for purchase?

Ronnie Estimates That There Are Three Possible Return Outcomes for a Stock