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Consider the following: Rate of Return if State Occurs State of Economy Probability of state Stock A Stock B Stock C Boom .6 .18 ,04

Consider the following: Rate of Return if State Occurs

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

Boom .6 .18 ,04 .31

Bust .4 .03 .16 -.11

What is the expected return on an equally weighted portfolio of theses stocks? What is the variance of a portfolio invested 20% each in A and B and 60% in C?

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