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Returns and Standard Deviations [LO1] Consider the following information: Rate of Return If State Occurs State of Economy Probability of State of Economy Stock A

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Returns and Standard Deviations [LO1] Consider the following information: Rate of Return If State Occurs State of Economy Probability of State of Economy Stock A Stock B Stock C Boom .10 .35 .40 .27 Good .60 .16 .17 .08 Poor .25 -.01 -.03 -.04 Bust .05 -. 12 -.18 -.09 a. Your portfolio is invested 30 percent each in A and C, and 40 percent in B. What is the expected return of the portfolio? b. What is the variance of this portfolio? The standard deviation

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