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Consider a stock and the following state dependent scenario of returns: the boom state has a 15% probability and returns 60%; the good state has
Consider a stock and the following state dependent scenario of returns: the boom state has a 15% probability and returns 60%; the good state has a 50% probability and returns 20%; the recession state has a 25% probability and returns a loss of 10%; and the depression state has a 10% probability and returns a loss of 30%. Calculate the stock's variance.
.0372
.0472
.0572
.0672
.0772
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