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Illustration Seven: Consider the returns of two securities A & B which depend on the states of nature with the following probabilities. State Probability Returns

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Illustration Seven: Consider the returns of two securities A & B which depend on the states of nature with the following probabilities. State Probability Returns % Recession Stable Expansion 0.3 0.4 0.3 10 15 10 7.5 Required: ( Compute the expected returns of A and (ii) Compute the standard deviation of the individual securities i) B

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