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Suppose your expectations regarding the stock market are as follows: State of the Economy Boom Normal growth Recession Mean Standard deviation Probability 0.3 % %

Suppose your expectations regarding the stock market are as follows: State of the Economy Boom Normal growth Recession Mean Standard deviation Probability 0.3 % % 0.3 0.4 HPR 39% 21 -18 E (r) = p (s)r (s) Var (r) = o = -p(s)[r (s)- E(r)] SD (r) = o = 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.) 4

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