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(15 points) You have developed the following predicted returns for a company's stock: State of the Economy Recession Probability 20 Rate of Return (45%) Average
(15 points) You have developed the following predicted returns for a company's stock: State of the Economy Recession Probability 20 Rate of Return (45%) Average growth .30 10% High growth .30 72-20% Boom .20 50% The company's beta is 1.5. The risk-free rate of interest is 3% and the expected return on the market is 9%. Based on this information, should you invest in this stock? (Justify your answer with specific calculations.)
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