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Consider the following probability distribution for stocks A and B: State Probability Return on Stock A % Return on Stock B % 1 0.10 10

Consider the following probability distribution for stocks A and B:

State

Probability

Return on Stock A %

Return on Stock B %

1

0.10

10

8

2

0.20

13

7

3

0.20

12

6

4

0.30

14

9

5

0.20

15

8

The expected rates of return of stocks A and B are --- and ---, respectively.

a.

13.2%; 9%

b.

14%; 10%

c.

10%; 8%.

d.

13.2%; 7.7%

e.

7.7%; 13.2%

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