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Consider the following subjective probability distribution for a potential investment: State of the economy probability Estimated rate of return Strong growth .1 25% Moderate growth

  1. Consider the following subjective probability distribution for a potential investment:

State of the economy

probability

Estimated rate of return

Strong growth

.1

25%

Moderate growth

.4

15

Weak growth

.4

10

Recession

.1

-12
  1. Calculate the expected rate of return
  2. Calculate the variance
  3. Calculate the standard deviation
  4. Calculate the coefficient of variation
  5. Interpret your answers in a-d

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