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You are thinking about investing your money in the stock market. You have the followingtwo stocks in mind: stock A and stock B . You

You are thinking about investing your money in the stock market. You have the followingtwo stocks in mind: stock A and stock B. You know that the economy can either go inrecession or it will boom. You know the following information about your two stocks:State of the Economy Probability RA RBBoom 2/310%2%Recession 1/36%40%Required: Calculate the expected return on a portfolio consisting of 10% invested in stock A andthe remainder in stock B.

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