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The economy has 20% chance of entering recession next year, and 80% chance of continuing the current expansion. If the economy is in recession, the
The economy has 20% chance of entering recession next year, and 80% chance of continuing the current expansion. If the economy is in recession, the return for BHP will be -20%. On the other hand, if the economy is in expansion, the return will be 15%. a. What is the expected return for BHP next year? b. What is the standard deviation of the return?
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