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Your two favorite companies are Firefox and Twitter. You feel like every year in the future will be randomly either a thumbs up year or
Your two favorite companies are Firefox and Twitter. You feel like every year in the future will be randomly either a thumbs up year or a 'thumbs down" year, which will determine how high the annual return on your stock investment into each of these companies' stock will be, as shown in the table below: Firefox Twitter State of the economy Probability of the state of the economy "Thumbs up "Thumbs down" 30% 70% Return-25% Return=10% Return-15% Return=20% (a) The Expected Return for Firefox' stock equals Firefox EIR) - 14.50% - (b) The Expected Return of a portfolio with 40% invested into Firefox stock and 60% invested into Twitter stock equals
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