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State of Economy Boom Bust Probability of State of Economy 0.76 0.24 Rate of Return if State Occurs Stock A Stock B Stock C 0.05

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State of Economy Boom Bust Probability of State of Economy 0.76 0.24 Rate of Return if State Occurs Stock A Stock B Stock C 0.05 0.11 0.23 0.11 0.17 -0.07 a. What is the expected return on a portfolio invested 20 percent each in A and B and 60 percent in C? (8 pts) b. What is the variance of the portfolio in (a)? (8 pts)

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