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The table below shows the possible states of nature, the GDP growth rate, the probabilities of the growth rate occurring and the return on investment
The table below shows the possible states of nature, the GDP growth rate, the probabilities of the growth rate occurring and the return on investment if the growth rates do occur. Compute the expected return Compute the standard deviation of the expected returns State of Nature GDP GROWTH RATE PROBABILITY RETURN ON INVESTMENT S1 - Economy growths rapidly 10% 20% 35% S2 - Economy growths at normal rate 6% 60% 20% S3 - Economic growth declines 3% 20% 10%
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