Ravinder's Guitar Shop is expected to generate a 140% return in a boom market, a 12% return
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Question:
Ravinder's Guitar Shop is expected to generate a 140% return in a boom market, a 12% return in a normal market, and a minus 15% (i.e. -15%) return in a recession. There is a 25% probability of a boom market, a 45% probability of a normal market and a 30% probability of a recession. What is (a) the expected return (2 marks) and (b) the standard deviation (2 marks) of Ravinder's Guitar Shop?
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