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Suppose you have $20,000 total. If you put $14,000 in Stock A and the remainder in Stock B, what will be the expected return on your portfolio? What will be the standard deviation on your portfolio?

State of Economy Probability Return on A Return on B

Recession 0.1 -20% 30%

Normal 0.6 10% 20%

Boom 0.3 70% 50%

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