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Your expectation regarding the stock market are as follows: State of the economy (i) Probability (P i ) Return (R i ) Boom 35% 25%

  1. Your expectation regarding the stock market are as follows:

State of the economy (i)

Probability (Pi)

Return (Ri)

Boom

35%

25%

Normal

50%

10%

Recession

15%

-7%

Calculate the expected return (mean) and variance and standard deviation of returns on stocks

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