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Imagine two stocks: Stock A and Stock B . You plan to invest $ 2 0 0 , 0 0 0 in these two stocks
Imagine two stocks: Stock A and Stock B You plan to invest $ in these two stocks and you believe that their returns will depend on the future state of the economy. There are four possible states and the information about each state with each stock's returns are summarized in the table below:
tableScenarioProbability,tableStock AsReturntableStock BsReturnGreat
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