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There is a 15 percent chance that the economy will prosper; otherwise it will be normal. Stock G should return 15 percent in a boom
There is a 15 percent chance that the economy will prosper; otherwise it will be normal. Stock G should return 15 percent in a boom and 8 percent in a normal economy. Stock H should return 9 percent in a boom and 6 percent otherwise. What is the variance of a portfolio consisting of $3,500 in G-shares and $6,500 in H-shares?
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