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10. Returns and Standard Deviations (LO1, 2) Consider the following information: State of Economy Boom on Good Poor Bust Probability of State of Economy .15

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10. Returns and Standard Deviations (LO1, 2) Consider the following information: State of Economy Boom on Good Poor Bust Probability of State of Economy .15 55 :25 Rate of Return if State Occurs Stock A Stock B Stock C .35 45 27 16 08 -01 -06 -.04 -12 -12 - 09 .10 .05 1. Your portfolio is invested 30 percent each in A and C, and 40 percent in B. What is the expected return of the portfolio? 2. What is the variance of this portfolio? The standard deviation? NOVI

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