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Suppose you have predicted the following returns for stocks X and Y in three possible states of nature. What are the expected returns? State Probability
Suppose you have predicted the following returns for stocks X and Y in three possible states of nature. What are the expected returns?
State | Probability | X | Y |
Boom | 0.3 | 0.15 | 0.25 |
Normal | 0.5 | 0.10 | 0.20 |
Recession | 0.2 | 0.02 | 0.01 |
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