You recently purchased a stock that is expected to earn 11 percent in a booming economy, 9 percent in a normal economy and lose 6 percent in a recessionary economy. There is a 15 percent probability of a boom, a 74 percent chance of a normal economy. What is your expected rate of return on this stock

Expected rate of return = 7.7%

Explanation:

The expected return on the stock would be the sum of the the probability of outcome times the outcome return.It is given using the relationship below

E= ∈ Ri.Pi

Expected return = (11%  × 0.15) + (9%  ×0.74)+ (-6%)  ×  0.11)= 7.7%

Note that the probability of recession = 1 - (0.74+0.15)= 0.11. This is so because the sum of the probability should equal 1

Expected rate of return = 7.7%

if you use only 25 for your entertainment and only 200 for the groceries that you really need and take out the 50 per month for the computer then that should be enough

answer the law of increasing costs;