Question: An analyst has predicted the following returns for Stock A and Stock B in three possible states of the economy. State Probability A B Boom

An analyst has predicted the following returns for Stock A and Stock B in three possible states of the economy.

State Probability A B

Boom 0.24 0.18 0.32

Normal0.44 0.12 0.26

Recession ? 0.09 0.20

a. What is the probability of a recession? (Round your answer to 2 decimal places.)

probability

b. Calculate the expected return for Stock A and Stock B. (Round your answers to 2 decimal places.)

stock a

stock b

c. Calculate the expected return for a portfolio that is invested 46% in A and 54% in B. (Round your answer to 2 decimal places.

Expected return

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