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Ion owns a two-stock portfolio that invests in Celestial Crane Cosmetics Company (CCC) and Lumbering 0x Truckmakers (LOT). Threequarters of Ian's portfolio value consists of
Ion owns a two-stock portfolio that invests in Celestial Crane Cosmetics Company (CCC) and Lumbering 0x Truckmakers (LOT). Threequarters of Ian's portfolio value consists of ccc's shares, and the balance consists of tot's shares. Fach stock's expected retum for the next year will depend on forecasted market conditions. The expected returns from the stocks in different market conditions are detalled in the following table: Celculate expected returns for the individual stocks in Ian's portfolio as well as the expected rate of return of the entire portfolio over the three possible market conditions next year. - The expected rate of return on Celestial Crane Cosmetics's stock over the next year is - The expected rate of retum on Lumbering Ox Truckmakers's stock over the next year is - The expected rate of retum on lan's portfolio over the next year is The expected returns for fan's portfolio were calculated based on three possible conditions in the market. Such conditions will vary from time to time, and for each condition there will be a specific outcome. These probabilities and outcomes can be represented in the form of a continuous probability distribution graph
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