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A portfolio holds stock A and stock B in equal amounts. Stock A has a 50% chance of earning 10% if the economy does well
A portfolio holds stock A and stock B in equal amounts. Stock A has a 50% chance of earning 10% if the economy does well and a 50% chance of earning 2% if the economy performs poorly. Stock B has a 50% chance of earning 3% if the economy does well and a 50% chance of earning 5% if the economy does poorly. What is the expected return of the portfolio?
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