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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 0.4 0.3 HPR 44% 14
Suppose your expectations regarding the stock market are as follows: State of the Economy Boom Normal growth Recession Probability 0.3 0.4 0.3 HPR 44% 14 -16 S E(r) p(s)r(s) ) s=1 Var(r) = o2 = (s)[r(s) - E(r)]? = s=1 SD(r) = g = 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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