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State of Economy Recession Probability of State Occurring Stock A's Stock B's Conditional Return Conditional Return 0.30 -12% 20% Normal 0.50 14% 12% Boom
State of Economy Recession Probability of State Occurring Stock A's Stock B's Conditional Return Conditional Return 0.30 -12% 20% Normal 0.50 14% 12% Boom 0.20 25% -10%
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