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The rate of return on the common stock of Flowers by Flo is expected to be 13 percent in a boom economy, 11 percent in
The rate of return on the common stock of Flowers by Flo is expected to be 13 percent in a boom economy, 11 percent in a normal economy, and only 6 percent in a recessionary economy. The probabilities of these economic states are 15 percent for a boom, 80 percent for a normal economy, and 5 percent for a recession. What is the variance of the returns on this stock?
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