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Problem 17-2Complete the following tableInstructions Enter y.pdf

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Problem 11-6 Calculating Expected Return [LO 1] Calculate the expected return. (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)Consider the following information: Solution The above problem states : State of Economy Recession Probability of State of Economy .18 Rate of Return if State Occurs –.11 Normal .47 .13 Boom .35 .32 Formulae of Exp return = Prob of occurence * return on occurence Therefore the cumulative expected return = (Prob of Recession * return on Recession) + (Prob of Normal * return on Normal) + (Prob of Boom * return on Boom) Exp Return = (0.18 * -0.11) + (0.47 * 0.13) + (0.35 * 0.32) = - 0.0198 + 0.0611 + 0.112 = 0.1533 = 15.33% State of Economy Recession Probability of State of Economy .18 Rate of Return if State Occurs –.11 Normal .47 .13 Boom .35 .32.

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- Problem 11-6 Calculating Expected Return [LO 1] Calculate the expected return. (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)Consider the following information: Solution The above problem states : State of Economy Recession Probability of State of Economy .18 Rate of Return if State Occurs –.11 Normal .47 .13 Boom .35 .32 Formulae of Exp return = Prob of occurence * return on occurence Therefore the cumulative expected return = (Prob of Recession * return on Recession) + (Prob of Normal * return on Normal) + (Prob of Boom * return on Boom) Exp Return = (0.18 * -0.11) + (0.47 * 0.13) + (0.35 * 0.32) = - 0.0198 + 0.0611 + 0.112 = 0.1533 = 15.33% State of Economy Recession Probability of State of Economy .18 Rate of Return
- if State Occurs –.11 Normal .47 .13 Boom .35 .32

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