Your investment has a 20% chance of earning a 30% rate of return, a 50% chance of earning a 10% rate of return, and a 30% chance of losing 6%. What is your expected return on this investment?
A. 12.8%
B. 11%
C. 8.9%
D. 9.2%
Answer: D. 9.2%
(.2)(30%) + (.5)(10%) + (.3)(-6%) = 9.2%