Question
1. You are thinking about in a common stock with the following possible outcomes: Probability of States Occurrence (Pi) State 1: Economic boom 0.25
1. You are thinking about in a common stock with the following possible outcomes: Probability of States Occurrence (Pi) State 1: Economic boom 0.25 State 2: Average Growth 0.50 State 3: Economic decline 0.25 Investment Investment Returns (X) Returns (Y) 24% 45% 13% 8% 5% -11% Based on the data above, calculate the expected rate of return (in %) and the standard deviation of returns () for both investment X and Y. Based on the coefficient of variation, which investment (X or Y) would you choose?
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