The annual returns, in percentages, on stocks A and B for three possible states of the economy are given in the table below.
Economy State Probability Stock A Stock B
Good 0.5 40 20
Average 0.3 20 40
Bad 0.2 10 8
If one invested in Stock A, what would be the expected annual percentage return?
This short answer question belongs to Statistics and it is about calculating the expected return from investing in two investments with 3 possible outcomes.
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