Question: Question 3 (1 point) You are expecting either a recession or steady growth next year. Recession has a 37% probability of happening. In steady growth,

Question 3 (1 point) You are expecting either a recession or steady growth next year. Recession has a 37% probability of happening. In steady growth, stock ABC returns 10.50% and stock XYZ returns 7.50%. In a recession, stock ABC returns -5.60% and stock XYZ returns -3.40%. You are going to put together a portfolio of these two stocks with positive portfolio weight in each and allocate 43% of the portfolio to ABC with the remainder to XYZ. What is the variance of the portfolio? 0.00392 0.00402 0.00412 0.00422 0.00432

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