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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 0.3 0.4 HPR 33% 19
Suppose your expectations regarding the stock market are as follows: State of the Economy BOOM Normal growth Recession Probability 0.3 0.3 0.4 HPR 33% 19 -15 E(r) = P(s)r(s) Var(r) = g2 = (s)[r(s) E(r)]? E 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.) Answer is not complete. % Mean Standard deviation 5.77 X %
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