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2. Calculate the expected return, variance, and standard deviations of stock A, stock B, and obtain...

2. Calculate the expected return, variance, and standard deviations of stock A, stock B, and obtain the expected return of an equally weighted portfolio of both (meaning 50% in A, and 50% in B).

States of Economy

Probability

Return on stock A

Return on stock B

Recession

1/3

-4%

9%

Normal

1/3

8%

4%

Boom

1/3

20%

-4%
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