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Bacon and? Associates, a famous Northwest think? tank, has provided probability estimates for the four potential economic states for the coming year. The probability of a boom economy is 23%?, the probability of a stable growth economy is 42?%, the probability of a stagnant economy is 22?%, and the probability of a recession is 13?%. Calculate the variance and the standard deviation of the three? investments: stock, corporate? bond, and government bond. If the estimates for both the probabilities of the economy and the returns in each state of the economy are? correct, which investment would you? choose, considering both risk and? return?

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Financial Management, Finance

Category:- Financial Management
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