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Suppose your expectations regarding the stock market are as follows: State of the Economy Boom Normal growth Recession Probability 0.4 0.5 0.1 HPR 35% 18
Suppose your expectations regarding the stock market are as follows: State of the Economy Boom Normal growth Recession Probability 0.4 0.5 0.1 HPR 35% 18 -13 S E(r) = P(() SE 1 S Var(r) = o2 = P(s)[r(s) - E(r)]? s=1 SD(r) = y = V Var(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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