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Suppose that Mrs Jenny can invest all her savings in shares in Glaxy plc or all her savings in Russell plc. Alternatively she could diversify

Suppose that Mrs Jenny can invest all her savings in shares in Glaxy plc or all her savings in Russell plc. Alternatively she could diversify her investment between these two. There are three possible states of the economy - boom, growth or recession - and the returns of Benckiser and Resque depend on which state will occur.

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