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The common price for the second stock is 150 dollars. Five different states are expected: extreme risk with 5%, high risk with 10%, medium risk
The common price for the second stock is 150 dollars. Five different states are expected: extreme risk with 5%, high risk with 10%, medium risk (or fair) with 50%, low risk with 30%, and safest mode with 5% probabilities. The expected future prices for each state are 225, 185, 170, 145, and 90 dollars, respectively. The expected dividends are 3.5, 2, 1.5, -0.5, and -2 dollars, respectively. Calculate the expected return and standard deviation over all contingencies (4 points).
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