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The following are possible states of the economy and the returns associated with stocks A and B in those states. State Probability Return on A
The following are possible states of the economy and the returns associated with stocks A and B in those states. State Probability Return on A Return on B Good 0.25 24% 30% Normal 0.4 36% 18% Bad 0.35 48% -6% Calculate the expected return and the standard deviation of a portfolio comprised of stocks A and B. The weight in stock A is 40%.
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