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Sam has $10,000 and is considering investing in two stocks - HSCC and Sixcent. The...

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Accounting

Sam has $10,000 and is considering investing in two stocks - HSCC and Sixcent. The table below shows the returns of the stocks under different possible scenarios: imageDetermine if the two stocks are overpriced or underpriced and which (if any) should be purchased.

State of Affair Probability HSCC Sixcent Pandemic (long period of lockdown) 0.25 2% 20% Pandemic (short period of lockdown) 0.3 5% 10% No Pandemic 0.45 18% 2%

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