The expected return on a stock given various states of the economy is equal to the: summation of the individual expected rates of return. weighted average of the returns for each economic state. arithmetic average of the returns for each economic state. O highest expected return given any economic state. o return for the economic state with the highest probability of occurrence.

## Answer

**b. Weighted average of the return for each economic
state.**

**explanation:** Expected return is the weighted

average of possible return, with the weights being the

probabilities of occurance. The expected return on a stock given

various states of the economy is equal to the weighted average of

the return fir each economic state.