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Based on the following data; State of the Economy Probability Recession 0.2 Low Growth 0.25 Normal Growth 0.40 Boom 0.15 Stock A Rate of Return

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Based on the following data; State of the Economy Probability Recession 0.2 Low Growth 0.25 Normal Growth 0.40 Boom 0.15 Stock A Rate of Return Stock B Rate of Return 5% -20% 10% 10% 15% 20% 60% -5% (a) calculate the expected return and the standard deviation of returns for each stock (Stock A and Stock B). (b) Calculate the expected return and the standard deviation on the portfolio (Portfolio i), where the portfolio is formed by investing 50% of the funds in Stock A and the rest in Stock B. (c) Calculate the expected return and the standard deviation on the portfolio, (Portfolio II) where the portfolio is formed by investing 35% of the funds in Stock A and the rest in Stock B

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