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There are two states of the world, Boom and Bust. Boom occurs with 55% probability and Bust occurs with 45% probability. Stock Alpha has 21%
There are two states of the world, Boom and Bust. Boom occurs with 55% probability and Bust occurs with 45% probability. Stock Alpha has 21% return in a Boom and -8% return in a Bust. What is the expected return of stock Alpha?
A. 10%
B. 7.95%
C. 6.50%
D. 14.50%
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