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Suppose your expectations regarding the stock market are as follows: State of the Economy Boom Normal growth Recession E(r) = P(s)r(s) Probability HPR 0.3
Suppose your expectations regarding the stock market are as follows: State of the Economy Boom Normal growth Recession E(r) = P(s)r(s) Probability HPR 0.3 448 0.6 22 0.1 -15 Var (r) = = P(s)[r(s) - E(r)] SD (r) =Var (r) Required: 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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