Suppose your expectations regarding the stock price are asfollows:State of the MarketProbabilityEnding...

Suppose your expectations regarding the stock price are as follows:

State of the Market	Probability		Ending Price		HPR (including dividends)
Boom		0.28	$	140		53.5	%
Normal growth		0.23		110		20.0
Recession		0.49		80		−17.0

Use the equations E(r)=Σsp(s)r(s)E(r)=Σsp(s)r(s) and σ2=Σsp(s)[r(s)−E(r)]2σ2=Σsp(s) [r(s)−E(r)]2 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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jeff jeffy answered 2 years ago

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