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10. What is the risk premium for the following returns if the risk-free rate is 1%? State Probability Return Boom .05 15% Good .40 10%

10. What is the risk premium for the following returns if the risk-free rate is 1%?

State Probability Return

Boom .05 15%

Good .40 10%

Recession .30 -4%

Depression .05 -7%

A) 3.2% B) 2.2% C) 5.7% D) 2.5%

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