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The Glad Its Finally Over Company is considering three possible capital projects for next year....

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Finance

The Glad Its Finally Over Company is considering three possible capital projects for next year. Each project has a one-year life and project returns depend on the state of the economy. The estimated rates of return are shown in the following tables:

State of the Economy Probability of Each State Occurring Rates of Return if State Occurs
Project A Project B
Boom .40 6% 25%
Normal .40 8% 6%
Recession .20 15% -5%
Statistic Project A Project B
Expected Return 8.60% 11.40%
Standard Deviation 3.32% 11.81%

Given these probabilities and possible rates of return, the correlation of the cash flows for the projects is ____ %.

A. -86.25

B. -1.09

C. -1.64

D. 86.25

E. None of these are correct

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