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State of the economy Probability Stock P Stock Q Boom .7 32% 18% Recession .3 -14%...

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Finance

State of the economy Probability Stock P Stock Q Boom .7 32% 18%Recession .3 -14% -5% a. What is the expected return of Stock P? b.What is the expected return of Stock Q? c. What is the expectedreturn of a portfolio 60 percent invested in Stock P and theremainder in Stock Q? d. What is the standard deviation of aportfolio 60 percent invested in Stock P and the remainder in StockQ?

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Transcribed Image Text

State of the economy Probability Stock P Stock Q Boom .7 32% 18%Recession .3 -14% -5% a. What is the expected return of Stock P? b.What is the expected return of Stock Q? c. What is the expectedreturn of a portfolio 60 percent invested in Stock P and theremainder in Stock Q? d. What is the standard deviation of aportfolio 60 percent invested in Stock P and the remainder in StockQ?

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