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Consider the following information: Rate of Return If State Occurs State of Economy Probability ofState of Economy Stock A Stock B Stock C Boom .66

Consider the following information:

Rate of Return If State Occurs

State of Economy Probability ofState of Economy Stock A Stock B Stock C

Boom .66 .12 .21 .39

Bust .34 .20 .08 .08

What is the expected return on an equally weighted portfolio of these three stocks?

What is the variance of a portfolio invested 22 percent each in A and B and 56 percent in C?

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