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ABC Corp. stock is quite cyclical. In a boom economy, the stock is expected to return 26 percent in comparison to 12 percent in a
ABC Corp. stock is quite cyclical. In a boom economy, the stock is expected to return 26 percent in comparison to 12 percent in a normal economy and a negative 20 percent in a recessionary period. The probability of a recession is 15 percent while it is 30 percent for a booming economy. The remainder of the time, the economy will be at normal levels. What is the standard deviation of the returns?
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