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The returns on the common stock of New Image Products are quite cyclical. In a boom economy, the stock is expected to return 18 percent
The returns on the common stock of New Image Products are quite cyclical. In a boom economy, the stock is expected to return 18 percent in comparison to 9 percent in a normal economy and a negative 11 percent in a recessionary period. The probability of a recession is 15 percent while the probability of a boom is 25 percent. What is the standard deviation of the returns on this stock?
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