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Consider information regarding the following two stocks. The probability of each state of the economy is 1/3. No dividends are paid. (a) What is the

Consider information regarding the following two stocks. The probability of each state of the economy is 1/3. No dividends are paid.

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(a) What is the expected value and the standard deviation of the rate of return of each stock?

(b) Which stock is the better investment for you? Why?

Ending Price in Stock Initial Price Boom Normal Bust A 40 60 50 25 B 25 20 25 35

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