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A stock is expected to return 8% in a normal economy, 14% if the economy booms, and lose 5% if the economy moves into
A stock is expected to return 8% in a normal economy, 14% if the economy booms, and lose 5% if the economy moves into a recessionary period. Economists predict a 55% chance of a normal economy, a 15% chance of a boom, and a 30% chance of a recession. The expected return on the stock is 9.
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