Suppose your expectations regarding the stock price are as follows: State of the Market Boom Normal growth Recession Probability Ending Price 0.30 $ 140 110 80 Mean 0.22 0.48 HPR (including dividends) 55.5% 15.5 -14.0 Use the equations E (r) = Ep (s) r(s) and o² = Ep (s) [r(s) – E(r)] to compute the mean and standard deviation of the HPR on stocks. Note: Do not round intermediate calculations. Round your answers to 2 decimal places.
Suppose your expectations regarding the stock price are as follows: State of the Market Boom Normal growth Recession Probability Ending Price 0.30 $ 140 110 80 Mean 0.22 0.48 HPR (including dividends) 55.5% 15.5 -14.0 Use the equations E (r) = Ep (s) r(s) and o² = Ep (s) [r(s) – E(r)] to compute the mean and standard deviation of the HPR on stocks. Note: Do not round intermediate calculations. Round your answers to 2 decimal places.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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![Suppose your expectations regarding the stock price are as follows:
State of the
Market
Boom
Normal growth
Recession.
Probability Ending Price
0.30
$ 140
0.22
110
0.48
80
Mean
Standard deviation.
Use the equations E (r) = Ep (s) r(s) and o² = Ep (s) [r(s) - E(r)]² to compute the mean and standard deviation of the HPR on
stocks.
Note: Do not round intermediate calculations. Round your answers to 2 decimal places.
HPR
(including
dividends)
55.5%
15.5
-14.0
%
%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5cde0e34-1792-4d53-8065-96cb6bbc4e2e%2F69adf74f-a10c-43cb-addf-83845daaa50b%2F1e86ogp_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Suppose your expectations regarding the stock price are as follows:
State of the
Market
Boom
Normal growth
Recession.
Probability Ending Price
0.30
$ 140
0.22
110
0.48
80
Mean
Standard deviation.
Use the equations E (r) = Ep (s) r(s) and o² = Ep (s) [r(s) - E(r)]² to compute the mean and standard deviation of the HPR on
stocks.
Note: Do not round intermediate calculations. Round your answers to 2 decimal places.
HPR
(including
dividends)
55.5%
15.5
-14.0
%
%
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