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Calculate the return and standard deviation for the following stock, in an economy with five possible states. If a Boom (Probability=15%) economy occurs, then the
Calculate the return and standard deviation for the following stock, in an economy with five possible states. If a Boom (Probability=15%) economy occurs, then the expected return is 40%. If a Good (Probability=25%) economy occurs, then the expected return is 20%. If a Normal (Probability=30%) economy occurs, then the expected return is 12%. If a Bad (Probability=20%) economy occurs, then the expected return is 0%. If a Recession (Probability=10%) economy occurs, then the expected return is -15%. Show your work for partial credit.
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