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Muller knows that there are four possible states of the economy over the next year: boom, steady, slow, and bust. Each state of the economy
Muller knows that there are four possible states of the economy over the next year: boom, steady, slow, and bust. Each state of the economy is equally likely to occur. If the economy booms, then the stock will return 60 percent, if it is steady, Muller expects to earn 18 percent. If the economy slows, the investor expects to earn only 11 percent, and if the economy goes bust, the stock will lose 13 percent. Find the expected return, standard deviation and coefficient of variation for this stock?
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