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An investor owns a security that is expected to return 12% in a booming economy and 4% in a normal economy. The overall expected return
An investor owns a security that is expected to return 12% in a booming economy and 4% in a normal economy. The overall expected return on the security is 7.80%. Given there are only two states of the economy, what is the probability that the economy will boom?
Multiple Choice
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47.5%
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45.0%
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37.5%
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35.0%
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40.0%
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