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The rate of return on the common stock of Mechanics Corp. is expected to be 18.69% in a boom economy, 12.86% in a normal economy,
The rate of return on the common stock of Mechanics Corp. is expected to be 18.69% in a boom economy, 12.86% in a normal economy, and only -7% in a recessionary economy. The probabilities of these economic states are 20% for a boom, 70% for a normal economy, and 10% for a recession. What is the variance of the returns on the common stock of Mechanics Corp.? The numbers should be typed in DECIMAL format rounded to 4 decimal places. Do not enter it as percentage.
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