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Determine the expected return for Paradigm modeling

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Reference no: EM133091420

Question - Paradigm Modeling has a beta of 1.20. The risk-free rate is 1%. The return on the market portfolio depends on the state of the economy. There is a 25% chance of a recession, a 60% chance of a normal economy and a 15% chance of a boom; with the market returns of -10% in recession, +6% in the normal economy, and 30% in the boom economy. Determine the expected return for Paradigm modeling?

Reference no: EM133091420

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