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The following are possible states of the economy and the returns associated with stocks of Microsoft and Amazon in those states (7 marks) Conditions Probability

The following are possible states of the economy and the returns associated with stocks of Microsoft and Amazon in those states (7 marks) Conditions Probability Return (Microsoft) Return (Amazon) Strong 0.30 22% 6% Normal 0.40 15 19 Weak 0.30 -8 26 Calculate the expected return and the standard deviation of a portfolio comprised of stocks of Microsoft and Amazon. The weight in stock of Microsoft is 50%

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