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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 E() = P(s) r(s) Var(r) = o? P)[r(s) E(r)? s=1 SD(r) = = - 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.) Answer is complete but not entirely correct. 1.53 X % Mean Standard deviation 20.10 X %
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