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Suppose your expectations regarding the stock market are as follows: State of the Economy Probability HPR Boom 0.2 43% 0.4 Normal growth Recession 0.4 S
Suppose your expectations regarding the stock market are as follows: State of the Economy Probability HPR Boom 0.2 43% 0.4 Normal growth Recession 0.4 S E(r) = p(s)r(s) s=1 Var(r) = = p(s)[r(s) - E(r)] SD (r) = 0 = VVar(r) Mean Standard deviation 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.) 14 -17 % %
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