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TUUTTI, IUW UU you interpret your answer? 9. Returns and variances (LO1] Consider the following information: State of Economy Probability of State of Economy Rate

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TUUTTI, IUW UU you interpret your answer? 9. Returns and variances (LO1] Consider the following information: State of Economy Probability of State of Economy Rate of Return if State Occurs Stock A Stock B Stock C 15 25 11 -04 -08 .75 Boom Bust .06 .25 a. What is the expected return on an equally weighted portfolio of these three stocks?? What is the variance of a portfolio invested 20 percent each in A and B and 60 percent in C? 10

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