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Calculate the following questions. Show all work and assumptions ...

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Question

Accounting

Calculate the following questions. Show all work and assumptions

State of Economy

Probability of state

Returns if state occurs (%)

BA

BB

BC

Recession

0.10

-5

-5

-7.5

Normal

0.70

+15

+12

+15

Boom

0.20

+40

+28

+26

Required:

(i)

Calculate the expected return for each of the three stocks.

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