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1. You want to invest your money on two stocks of GE and GM by constructing a portfolio. 50% of your money goes to the

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1. You want to invest your money on two stocks of GE and GM by constructing a portfolio. 50% of your money goes to the investment on GM stock and 50% to GE. According to your investigation on two stocks, expected return on each stock by economic situation is as follows. What is the expected retum of your portfolio with two stocks? What is the risk represented by standard deviation? GM 8% State Boom Normal Recession Probability 0.15 0.70 0.15 GE 22% 15% 6% 18% 32%

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