Question: The expected return from two stocks, Microsoft and Boeing, under different states of the economy are as follows: State of the economy Poor, Average,
The expected return from two stocks, Microsoft and Boeing, under different states of the economy are as follows:
State of the economy – Poor, Average, Good,
Probability – Poor 20%, Average 40%, Good 40%
Microsoft – Poor 5%, Average 15%, Good 20%
Boeing – Poor −40%, Average 10%, Good 60%
(A) Find the expected return of Microsoft and of Boeing.
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