Question: Consider the following two stocks. Probabilities ( pi pi ) Stock a Stock b Recession p1= p1= 23% -3% 10% Normal p2= p2= 21% 7%

Consider the following two stocks.

Probabilities (pipi ) Stock "a" Stock "b"
Recession p1=p1= 23% -3% 10%
Normal p2=p2= 21% 7% -7%
Boom p3=p3= 56% 14% 24%

What is the expected return of each stock? Enter your answers as a percentage rounded to 2 decimal places. Do not enter the percentage sign in your answer.

ra=

rb=

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