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Consider the case of two financial assets and three market conditions (states). The table below gives the respective probability for each market condition and the

Consider the case of two financial assets and three market conditions (states). The table below gives the respective probability for each market condition and the return of each asset in each one of them. Market Conditions State Recession Normal Expansion Probability of state 30% 40% 30% Return of asset A -30% 20% 55% Return of asset B -10% 70% 0% Estimate the equation of the efficiency frontier.

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