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7. Investment: There are two assets and three states of the economy: Probability of State of Economy Rate of Return If State Occurs Stock A
7. Investment: There are two assets and three states of the economy: Probability of State of Economy Rate of Return If State Occurs Stock A Stock B State of Economy Recession Normal .30 -.15 .20 .20 .30 .50 .20 Boom .60 .40 Suppose you have $20,000 total. If you put $15,000 in Stock A and the remainder in Stock B, what will be the expected return of your portfolio? A. 0.2038 B. 0.2075 C. 0.2132 D. 0.2201 E. 0.3601 Question 8 10 pts 8. Continued with question 7. If risk free rate is 5%, what's stock A's sharpe ratio? A. 0.37 B. 0.44 C. 0.48 D. 0.67 E. 0.83
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