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Question 2: The state of the economy has strong effect on expected returns as shown below: State of the Economy Probability 0.35 Recession Stable Expansion

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Question 2: The state of the economy has strong effect on expected returns as shown below: State of the Economy Probability 0.35 Recession Stable Expansion Stock Returns -10% 10% 30% 0.4 0.25 What is the expected rate of return and the standard deviation of the rate of return

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