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Alpha and Omega have the following data: Economic State Probability of Occurrence Rate of Return Good Better Recession 0.2 5% 7% Normal 0.5 15% 10%

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Alpha and Omega have the following data: Economic State Probability of Occurrence Rate of Return Good Better Recession 0.2 5% 7% Normal 0.5 15% 10% Boom 0.3 20% 25% Suppose you invest $40,000 in Alpha and $65,000 in Omega Standard deviations of Alpha and Omega are 6.4% and 4.2% respectively. correlation coefficient is 0.8 Determine the expected risk/return on the following possible portfolio combinations: Weightings Good Better Portfolio A 100% 0% Portfolio B 75% 25% Portfolio C 60% 40% Portfolio D 25% 75% Portfolio E 0% 100%

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