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4a Market Condition Boom Normal Recession Probability 1/3 S 1/3 1/3 Find the expected return and standard deviations Formula Return 50% 20% -10% Rule 1:

4a Market Condition Boom Normal Recession Probability 1/3 S 1/3 1/3 Find the expected return and standard deviations Formula Return 50% 20% -10% Rule 1: expected return is the probability-weighted average of all the scenarios. E(r) = Pr(s)r(s)

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