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Suppose you invest $10,000 in Stock 1, and $15,000 into Stock 2. State Prob(S) Stock 1 Stock 2 Boom 20% 0.18 -0.05 Normal 45% 0.06

Suppose you invest $10,000 in Stock 1, and $15,000 into Stock 2.

State Prob(S) Stock 1 Stock 2

Boom 20% 0.18 -0.05

Normal 45% 0.06 0.15

Bust 15% -0.09 0.03

A) Calculate the weight of Stock 1 in the portfolio.

B) Calculate the expected return of the portfolio.

C) Calculate the variance of the portfolio.

D) Calculate the standard deviation of the portfolio.

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