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You recently purchased a stock that is expected to earn 28 percent in a booming economy, 15 percent in a normal economy, and lose 33
You recently purchased a stock that is expected to earn 28 percent in a booming economy, 15 percent in a normal economy, and lose 33 percent in a recessionary economy. There is a 13 percent probability of a boom and a 70 percent chance of a normal economy. What is your expected rate of return and variance on this stock?
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