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Please see the attached file for the question and instructions. Thank You. Problem 7.15 Kate reoently Invested in real estate with the intention of selling

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Please see the attached file for the question and instructions. Thank You.

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Problem 7.15 Kate reoently Invested in real estate with the intention of selling the property one year from today. She has modeled the returns on that investment based on three economic scenarios. She believes that if the economy stays healthy, then her investment will genelate a 3:] percent return. However, if the economy softens, as predicted, the return wlll be 1!] percent, while the return will be -25 percent if the economy slips Into a recession. If the probabilities of the healthy, soft, and recessionary states are 0.6, 0.1, and 0.3, respectively, then what are the expected return and the standard deviation of the return on Kate's invatment? (Round expected return to 3 decimai pieces, e.g. 0.125 and round intermediate caicuiations and sladamr deviation to 5 decimai places, e.g. 0. 07580.) Expected retum Standard deviation

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