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Consider the following information: Rate of return if state occurs State of economy Probability of state of economy Stock A Stock B Boom 0.2 24%
Consider the following information:
|
| Rate of return if state occurs | ||
State of economy | Probability of state of economy | Stock A | Stock B |
|
Boom | 0.2 | 24% | 45% |
|
Good | 0.35 | 9% | 10% |
|
Poor | 0.3 | 3% | -10% |
|
Bust | ?? | -5% | -25% |
You have $2,000 invested in stock A and $3,000 invested in stock B. Compute the expected return and total risk of this portfolio.
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