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The returns on shares of Laverne Corporation and Shirley Corporation are predicted under the following various...

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Finance

The returns on shares of Laverne Corporation and ShirleyCorporation are predicted under the following various economicconditions:

State of Economy Return on Laverne Return on Shirley

Recession -20% -30%

Stagnant +0% -5%

Moderate Growth +10% +10%

Boom +30% +65%

Each economic state has a 25% probability of occurring.

What are the expected returns of each stock? What are thevariances of each stock? What are the standard deviatiions of eachstock?

  • Also solve the problem for a portfolio of both stocks, with 25%invested in Laverne and 75% invested in Shirley

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The returns on shares of Laverne Corporation and ShirleyCorporation are predicted under the following various economicconditions:State of Economy Return on Laverne Return on ShirleyRecession -20% -30%Stagnant +0% -5%Moderate Growth +10% +10%Boom +30% +65%Each economic state has a 25% probability of occurring.What are the expected returns of each stock? What are thevariances of each stock? What are the standard deviatiions of eachstock?Also solve the problem for a portfolio of both stocks, with 25%invested in Laverne and 75% invested in Shirley

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