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a) Consider the following information State ofEconomy Boom Bust Probability of State of Economy 0.65 0.35 Rate of Return if State Occurs Stock A Stock

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a) Consider the following information State ofEconomy Boom Bust Probability of State of Economy 0.65 0.35 Rate of Return if State Occurs Stock A Stock B Stock C 0.07 0.15 033 0.13 0.03 0.06 a What is the expected return on an equally weighted portfolio of these three stocks? b. What is the variance of a portfolio invested 20% each in A and B and 60% in C? 1

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