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Suppose your expectations regarding the stock market are as follows: State of the Economy Boom Normal growth Recession Probability 0.3 0.6 0.1 HPR 41% 24
Suppose your expectations regarding the stock market are as follows: State of the Economy Boom Normal growth Recession Probability 0.3 0.6 0.1 HPR 41% 24 -18 S E() p(s) r(s) Se 1 Var(r) = 72 = P(s)[r(s) - E(r)]2 s=1 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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