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The following table shows the different states that may prevail in an economy next year, and their respective probabilities and the returns related to each
The following table shows the different states that may prevail in an economy next year, and their respective probabilities and the returns related to each state for a company.
Scenario | Probability | HPR(%) |
Severe recession | 0.07 | -15 |
Mild recession | 0.21 | -5 |
Normal growth | 0.50 | 8 |
Boom | 0.22 | 16 |
Using the information in the above table answer the following questions:
Calculate the expected return
Calculate the standard deviation
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