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State of economy Probability of state of economy Rate of return if state occurs Stock X Stock Y Recession 0.2 0.06 -0.02 Normal 0.6 0.08

State of economy

Probability of state of economy

Rate of return if state occurs

Stock X

Stock Y

Recession

0.2

0.06

-0.02

Normal

0.6

0.08

0.06

Boom

0.2

0.12

0.10

Consider a portfolio in which 60% of your money is invested in stock X and 40% of your money is invested in stock Y. What the expected return and standard deviation of this portfolio?

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