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Rachel owns shares of stock A and Stock B in her portfolio. The total value of her Stock A shares is 2,000. The total value
Rachel owns shares of stock A and Stock B in her portfolio. The total value of her Stock A shares is 2,000. The total value of her Stock B share is 8,000. The table below shows the different states of the economy, the probabilities, and the returns for each stock, for the upcoming year. Probability State of the economy Boom Normal Bust 30% 30% 40% Return on Return on Stock A Stock B -4% -18% 4% 6% 10% 18% Calculate the expected retum on Stock A: the expected return on Rachel's portfolio; and the standard deviation of her portfolio
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