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 Mean Standard deviation HPR E (r) Σs-1 P(s)r(s) Var (r) = o² = SD (r) = 0 = √Var (r) Required: 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.) 44% 14 -16 14.00% 23.24 % -1P (s)[r (s)- E (r)]²
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 Mean Standard deviation HPR E (r) Σs-1 P(s)r(s) Var (r) = o² = SD (r) = 0 = √Var (r) Required: 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.) 44% 14 -16 14.00% 23.24 % -1P (s)[r (s)- E (r)]²
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter2: Risk And Return: Part I
Section: Chapter Questions
Problem 7P
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Question
![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
Mean
Standard deviation
E (r)
Σ=1p(s)r(s)
Var (r) = o² = Σ³-1 P (s)[r (s) — E (r)]²
-
SD (r) = o = √Var (r)
Required:
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.)
14.00%
23.24%
HPR
X
2 decimal places required.
44%
14
-16](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa20122bf-410d-4a3b-97ef-dca9d41a62bd%2F3b2f5027-8d4d-4dc0-848c-b7fba9a1e289%2F16u55xt_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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
Mean
Standard deviation
E (r)
Σ=1p(s)r(s)
Var (r) = o² = Σ³-1 P (s)[r (s) — E (r)]²
-
SD (r) = o = √Var (r)
Required:
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.)
14.00%
23.24%
HPR
X
2 decimal places required.
44%
14
-16
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