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Consider the Following: Rate of Return if State Occurs State of Probability of Economy State of Economy Stock A Stock B Recession 0.10 0.04 0.17
Consider the Following:
|
| Rate of Return if State Occurs | |||||||
State of | Probability of |
| |||||||
Economy | State of Economy | Stock A | Stock B | ||||||
Recession |
| 0.10 |
|
| 0.04 |
| 0.17 |
| |
Normal |
| 0.60 |
|
| 0.09 |
|
| 0.12 |
|
Boom |
| 0.30 |
|
| 0.17 |
|
| 0.27 |
|
Calculate the expected return for Stocks A and B.
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