1. Compute mean and standard deviation of the HPR on stocks

2. Derive the probability distribution of the 1 year HPR on a 30-year U.S Treasury bond with an 8% coupon if it is currently selling at par and the probability distribution of its price a year from now is as follows:

3. Compute the standard deviation of a random vqriable q with the following distribution:

1. Suppose your expectations regarding the stock price are as follows: Probability 0.35 Ending Price 140 State of the Market Boom Normal growth Recession HPR (including dividends) 44.50% 14.00% -16.50% 0.3 110 0.35 80 Compute the mean and standard deviation of the HPR on stocks. 2. Derive the probability distribution of the 1-year HPR on a 30-year U.S. Treasury bond with an 8% coupon if it is currently selling at par and the probability distribution of its price a year from now is as follows: YTM Price HPR Probability 0.2 11% Economy Boom Normal Growth Recession 0.5 8% 0.3 7% Assume that the entire 8% coupon is paid at the end of the year rather than every 6 months over a principal of $100. 3. Compute the standard deviation of a random variable q with the following probability distribution: Value of a 0 Probability 0.25 0.25 0.50 1 2 1. Suppose your expectations regarding the stock price are as follows: Probability 0.35 Ending Price 140 State of the Market Boom Normal growth Recession HPR (including dividends) 44.50% 14.00% -16.50% 0.3 110 0.35 80 Compute the mean and standard deviation of the HPR on stocks. 2. Derive the probability distribution of the 1-year HPR on a 30-year U.S. Treasury bond with an 8% coupon if it is currently selling at par and the probability distribution of its price a year from now is as follows: YTM Price HPR Probability 0.2 11% Economy Boom Normal Growth Recession 0.5 8% 0.3 7% Assume that the entire 8% coupon is paid at the end of the year rather than every 6 months over a principal of $100. 3. Compute the standard deviation of a random variable q with the following probability distribution: Value of a 0 Probability 0.25 0.25 0.50 1 2