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Suppose your expectations regarding the stock price are as follows: State...

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Finance

Suppose your expectations regarding the stock price are as follows:

State of the Market Probability Ending Price HPR (including dividends)
Boom 0.30 $ 140 47.5 %
Normal growth 0.22 110 16.0
Recession 0.48 80 14.5

Use the equations

E(r)=sp(s)r(s)E(r)=sp(s)r(s)

and

2=sp(s)[r(s)E(r)]22=sp(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.)

Mean %
Standard deviation %

Answer & Explanation Solved by verified expert
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