There are three possible states of nature--boom normality, Ask an Expert

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There are three possible states of nature--boom, normality, and bust--with probabilities .2, .6, and .2. In these three states, Stock A has expected future returns of -16.8, 6.6, and 19.8 percent. Stock B has expected future returns of -16.5, 9.9, and 16.7 percent. What is the expected return on a portfolio invested half in Stock A and half in Stock B in percent?

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Financial Management, Finance

Category:- Financial Management
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