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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 HPR 42% 0.4 15

 

Suppose your expectations regarding the stock market are as follows: State of the Economy Boom Normal growth Recession Probability 0.3 HPR 42% 0.4 15 0.3 -18 - E(r) = p(s)r(s) p(s)r(s) p(o)[r(s) Var(r) = p(s)[r(s) - E(r) 1 SD(r) VVar (7) 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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