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You have been given the following predictions about the return on a stock investment: Economy Probability of State of the Economy Return Severe recession .10

You have been given the following predictions about the return on a stock investment:

Economy

Probability of State of the Economy

Return

Severe recession

.10

(.20)

Mild recession

.30

(.10)

Normal growth

.40

.20

Boom

.20

.30

a. What is the stocks expected return? (Rounding: Do not round intermediate calculations. Enter your final answer as a decimal with four decimal places, e.g., if your answer is 9.5%, you would enter .0950.)

b. What is the stocks standard deviation? (Rounding: Do not round intermediate calculations. Enter your final answer as a decimal with four decimal places, e.g., if your answer is 9.5%, you would enter .0950.)

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