You have been given this probability distribution for the holding period return for a stock: State of the Economy Probability HPR (Fund A) HPR (Fund B)
Boom .50 7% 25%
Normal growth .3 -5% 10%
Recession .2 20% -25%
Toyota stock has the following probability distribution of expected prices one year from now:
State Probability Price
1 25% $50
2 40% $60
3 35% $70
If you buy Toyota today for $55 and it will pay a dividend during the year of $4 per share, what is your expected holding-period return on Toyota?