A portfolio analyst wants to include one of his stocks xy


A portfolio analyst wants to include one of his stocks, x,y into his portfolio. If next years inflation is less than 2%, stock x return is 20%, stock y return is 15%. If next years inflation rate is greater than or equal to 2%, stock x return is -30%, and stock y return is -20%. His forecast is that inflation is less than 2% with 80% probability. Which stock should he choose?

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Financial Management: A portfolio analyst wants to include one of his stocks xy
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