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Suppose the probability of the recession or boom is 30, while the probability of a period is.40. Would you expect the variance of returns on
Suppose the probability of the recession or boom is 30, while the probability of a period is.40. Would you expect the variance of returns on these two invest- ments to be higher or lower? Why? Confirm by calculating the standard deviation of the auto stock. (Refer to Section 11.3 if you are unsure of how to do this)
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