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In the following case, if the Risk free rate is 6%, which stock would you recommend and why. State of Nature Probability Stock A Stock
In the following case, if the Risk free rate is 6%, which stock would you recommend and why.
| State of Nature | Probability | Stock A | Stock B |
| 1 | 0.20 | 30.00 | 15.00 |
| 2 | 0.40 | -12.00 | 1.00 |
| 3 | 0.25 | 20.00 | 8.00 |
| 4 | 0.15 | 27.00 | 15.00 |
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Quantitative Trading
Authors: Ernest P. Chan
2nd Edition
1119800064, 978-1119800064
