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10. You have estimated the returns of 2 companies for the next year depending on the general economic condition. Outcome Boom Normal Recession robabilityCompany Company

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10. You have estimated the returns of 2 companies for the next year depending on the general economic condition. Outcome Boom Normal Recession robabilityCompany Company 2 30% 50% 20% 15% 5% 0% 5% 0 10% (a) Calculate the expected return and standard deviation of the returns of each company. (b) Calculate the covariance and correlation between the returns of these 2 companies. (c) Let's combine these 2 companies 50%-50% in portfolio P. Calculate the expected return and the standard deviation of the portfolioP. (d) Using mean-variance criterion, does any of the 3 investments, company 1, company 2, and portfolio P, dominate the other one

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