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b) Consider the following information: Rate of Return if State Occurs Stock A Stock B Stock C State ofEconomy Probability of State ofEconomy Boom 0.65

b) Consider the following information: Rate of Return if State Occurs Stock A Stock B Stock C State ofEconomy Probability of State ofEconomy Boom 0.65 0.07 0.15 0.33 Bust 0.35 0.13 0.03 0.06 a) What is the expected return on an equally weighted portfolio of these three stocks? b) What is the variance of a portfolio invested 15% each in A and B and 70% in C?

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