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3. The stock of GE sells for $40/share. Its likely dividend payout and end-of-year price depend on the state of the economy as follows: Probability
3. The stock of GE sells for $40/share. Its likely dividend payout and end-of-year price depend on the state of the economy as follows:
| Probability | Dividend | Stock Price |
Boom | 1/3 | $2 | $50 |
Normal | 1/3 | $1 | $43 |
Recession | 1/3 | $0.5 | $34 |
b) A portfolio invested half in GE and half in Treasury Bill with 4% return. Calculate the expected return and standard deviation of this portfolio.
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