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State of the Economy Boom Normal growth Recession Probability 0.3 0.6 0.1 HPR 44% 22 - 15 E() = P(S)r() Var(-) = 72 = POr(s)

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State of the Economy Boom Normal growth Recession Probability 0.3 0.6 0.1 HPR 44% 22 - 15 E() = P(S)r() Var(-) = 72 = POr(s) E(P SD(r) = 0 = VVar(r) Use above equations to compute the mean and standard deviation of the HPR on stocks. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Mean Standard deviation

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