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    Economy State Probability Stock A Stock B
    Good 0.5 40 20
    Average 0.3 20 40
    Bad 0.2 10 8

    If one invested in Stock A, what would be the expected annual percentage return? What would be the standard deviation of the percentage return?

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    Solution Summary

    The expert determines the methodology for the annual percentage return. A complete, neat and step-by-step solution is provided.