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State of the Market Probabilty Ending Price HPR (Including Dividens) Boom 0.30 140 47.5% Normal Growth 0.22 110 16.0 Recession 0.48 80 -14.5 Suppose your
State of the Market | Probabilty | Ending Price | HPR (Including Dividens) |
Boom | 0.30 | 140 | 47.5% |
Normal Growth | 0.22 | 110 | 16.0 |
Recession | 0.48 | 80 | -14.5 |
Suppose your expectations regarding the stock price are as follows:
Use the equations E(r)=sp(s)r(s)E(r)=sp(s)r(s) and 2=sp(s)[r(s)E(r)]22=sp(s)[r(s)E(r)]2 to compute the mean and standard deviation of the HPR on stocks. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
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