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drcumstances. To compute an asset's expectod return under a range of possibie clrcumstances :or states of nature), multiply the anticiasted return expected to resut during

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drcumstances. To compute an asset's expectod return under a range of possibie clrcumstances :or states of nature), multiply the anticiasted return expected to resut during each state of nature by its probstility of cocurrence. Corsiber the foliowng case: of Davie's pertfolie value consists of HDG's sharks, arded the balance cansists of BSB's shares. tach stod's expected return for the next year will depend on forecasted market condtions, The expected retums from the stocks in difarent market conditors are detalad in tha foliowirg table: Caloulate expected returns for the indididual stocks in David's portiolio as ael as the expected rate of return of the entire portfolio over the three possible market conditions nuat year, - The expected rate of return on Happy Dog Soap's stock over the neat year is - The expected rate of return an Biack Sheep Braschasting's steck ever the rext year is - The expected rate of return an David's pertfoi in aver the next year is timo, and for each condtion there wil be a specific cutcome. These probabiliziss and autcames can be regresentod in the form or a continuous grabubvinty districution graph. For example, the continuous probabilty distibutions of rates of return on stocks for two different companies are shown on the following graph: Based on the graph's infonmstion, whech stetement is false? Company H has lower rsk. Company G has lower riak

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