suppose your expectations regarding the stock market are as follows: State of the Economy Probability HPR Boom 0.2 42% Normal growth 0.6 23 Recession 0.2-17 E(r) = Σss = 1p(s)r( s) Var(r)=\sigma 2 = Σss = 1p(s)[r(s)-E(r)]2 SD (r)=\sigma = 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.)

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 26P
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suppose your expectations regarding the stock market are as follows: State of the Economy
Probability HPR Boom 0.2 42% Normal growth 0.6 23 Recession 0.2-17 E(r) = Σss = 1p(s)r(
s) Var(r)=\sigma 2 = Σss = 1p(s)[r(s)-E(r)]2 SD (r)=\sigma = 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.)
Transcribed Image Text:suppose your expectations regarding the stock market are as follows: State of the Economy Probability HPR Boom 0.2 42% Normal growth 0.6 23 Recession 0.2-17 E(r) = Σss = 1p(s)r( s) Var(r)=\sigma 2 = Σss = 1p(s)[r(s)-E(r)]2 SD (r)=\sigma = 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.)
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