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Problem 2 (20 points) Stock Number of shares Stock Price 750 1.2 220 51 0.8 460 1.6 Economic condition Probability Boom 20% 22% 20% 5096

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Problem 2 (20 points) Stock Number of shares Stock Price 750 1.2 220 51 0.8 460 1.6 Economic condition Probability Boom 20% 22% 20% 5096 Normal 15% 10% Recession 3094 5% 1. What is the expected return and standard deviation on this portfolio? 2. What is the portfolio beta te the expected return on the marketi 3. If you want to increase the return on your portfolio by 10% and increase its bets by 12% w should be the weight of Stock C? Problem 2 (20 points) Stock Number of shares Stock Price 750 1.2 220 51 0.8 460 1.6 Economic condition Probability Boom 20% 22% 20% 5096 Normal 15% 10% Recession 3094 5% 1. What is the expected return and standard deviation on this portfolio? 2. What is the portfolio beta te the expected return on the marketi 3. If you want to increase the return on your portfolio by 10% and increase its bets by 12% w should be the weight of Stock C

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