Question: You've estimated the following expected returns for a stock, depending on the strength of the economy: State (s) Probability Expected return Recession 0.3 -0.02 Normal

You've estimated the following expected returns for a stock, depending on the strength of the economy:

State (s) Probability Expected return
Recession 0.3 -0.02
Normal 0.5 0.09
Expansion 0.2 0.14

1. What is the expected return for the stock?

2. What is the standard deviation of returns for the stock?

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