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State of Nature………..Probability…………….State Dependent Return A………….State Dependent Return B Recession……………………..70%................................-0.08………………………………………………-0.04 Expansion.....................30%.................................0.28……………………………………………….0.16 What comes closest to the variance of Stock...

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Finance

State of Nature………..Probability…………….State Dependent ReturnA………….State Dependent Return B

Recession……………………..70%................................-0.08………………………………………………-0.04

Expansion.....................30%.................................0.28……………………………………………….0.16

What comes closest to the variance of Stock A and the standarddeviation of Stock B?

a.

Variance of Stock A = .0115, Standard deviation of Stock B =.0917

b.

Variance of Stock A = .0272, Standard deviation of Stock B =.1033

c.

Variance of Stock A = .0000, Standard deviation of Stock B =.0000

d.

Variance of Stock A = .0115, Standard deviation of Stock B =.1033

e.

Variance of Stock A = .0272, Standard deviation of Stock B =.0917

a or e?

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