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1. Calculate the standard deviation of the expected return given the economic states, their likelihoods, and the potential returns. Economic State Probability Return Fast Growth
1. Calculate the standard deviation of the expected return given the economic states, their likelihoods, and the potential returns. Economic State Probability Return Fast Growth 0.3 25% Slow Growth 0.5 6% w Recession 6 x -5% Depression 2x -17% 1. A company that has a beta of 1.3 will earn a return of 15% in the coming year. It is observed that the expected rate of return on the market is 13% and the rate on T-Bills is 5%. Based on your firm's level of risk, determine the return it should earn and based on your position state, give reasons the firm is over or undervalued
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