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Boom Normal Bust 0.20 0.50 0.30 27% 13% -7% PL Lumber stock expected to return 27% in a booming economy; 13% in a normal economy;
Boom Normal Bust 0.20 0.50 0.30 27% 13% -7% PL Lumber stock expected to return 27% in a booming economy; 13% in a normal economy; and -7% in a recession. The probabilities of an economic boom, normal state, or recession are 20%; 50%; and 30%, respectively. What is the expected rate of return on this stock? A/ What is the standard deviation of this stock? A/ What is the variance of this stock (show 4 decimals to the right of zero in your answer)? A
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