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Risk: Assume the following next year stock market scenarios probabilities and returns probability Return High growth .7 30% Medium growth .2 12% Recession .1 -15%

  1. Risk: Assume the following next year stock market scenarios probabilities and returns
probability Return
High growth .7 30%
Medium growth .2 12%
Recession .1 -15%
  1. Compute the expected return in percent.
  2. Compute the expected value of $1000 investment next year
  3. Compute the Standard deviation
  4. If the risk free rate is .05, what is the risk premium

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