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State of economy Probability of state of economy Rate of Return on stock if state occurs Stock A Stock B Boom 0.30 100% 20% Normal

State of economy Probability of state of economy Rate of Return on stock if state occurs Stock A Stock B Boom 0.30 100% 20% Normal 0.40 15% 15% Recession 0.30 -70% 10% Standerd deviation for stock A(2 Points)

19.41%

65.84%

4.41%

73.83%

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