The document outlines how to compute the expected return based on three economic states and their probabilities. The economic states are fast growth with a 30% probability and a 31.1% return, slow growth with a 40% probability and a 6.55% return, and recession with a 30% probability and a -2.55% return. Based on these figures, multiple choice answers for expected return include 11.2%, 20.1%, 12.7%, and 17.6%.

1. Expected Return Compute the expected return given these three economic states, their
likelihoods, and the potential returns.
Multiple Choice
11.2%
20.1%
12.7%
17.6%
Economic State Probability Return
Fast Growth .3 31.1 %
Slow Growth .4 6.55 %
Recession .3 -2.55 %