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Stock A's possible returns and related probabilities are as follows: Products Demand Weak Average Strong Probability

Stock A's possible returns and related probabilities are as follows:


Products Demand      Weak         Average      Strong

Probability                  0.2                   0.6           0.2

Return                        10%                15%          20%


What is the expected rate of return for stock A?

What is the stand-alone risk for stock A?

What is the benefit of holding a portfolio in lieu of a single stock?

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