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The rate of return on the common stock of a company is expected to be 11.75% in a boom economy, 6.75% in a normal economy,
The rate of return on the common stock of a company is expected to be 11.75% in a boom economy, 6.75% in a normal economy, and only 1.25% in a recessionary economy. The probabilities of these economic states are 23.0% for a boom, 64.0% for a normal economy, and 13.0% for a recession. What is the variance of the returns on the common stock of the company? 0.000878 0.000902 0.000926 0.000949 0.000973
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