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3. (15 points total) This problem entails the benefits of diversication - suppose we have the following conditions - assume you are the director of
3. (15 points total) This problem entails the benefits of diversication - suppose we have the following conditions - assume you are the director of a sovereign wealth fund for Home. Probability of each state = .50 {50%) a. (5 points) Suppose you decide to have 100% home bias in that you do not invest in Foreign at all. Mat is your expected output = consumption and what is the volatility of your output = consumption
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