Probabilities for three states of the economy and probabilities for the returns on a particular stock in
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What is the probability that the economy will be neutral and the stock will experience poor performance?
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Probability of Economic State Stock Performance Good Neutral Poor Good Neutral Poor Good Neutral Poor Probability of Stock Performance in Given Economic State State of Economy Good 6 Neutral .5 .4 Poor .2 .2 Bear Market Normal Market Bull Market Probability Stock X Stock Y 0.2 20% 15% 0.5 18% 20% 0.3 50% 10%
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