Suppose your expectations regarding the stock market are as follows:State of the EconomyBoomNormal growthRecessionE (r)=Σs=1 P(s)r(s)Var (r) = ² =Probability0.30.40.3Σs ₁ p (s)[r (s)- E (r)]²HPR44%14-16SD (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.)

HPR refers to holding period return.E(r) is the mean or the expected return. It is the average of…

Suppose your expectations regarding the stock market are as follows: State of the Economy Boom Normal growth Recession E (r) = Σ=1P(s)r(s) Var (r) = 6² 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.) Probability 0.3 0.4 0.3 Es=1 P (s)[r (s)- E (r)]² HPR 44% 14 -16

Suppose your expectations regarding the stock market are as follows: State of the Economy Boom Normal growth Recession E (r) = Σ=1P(s)r(s) Var (r) = 6² 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.) Probability 0.3 0.4 0.3 Es=1 P (s)[r (s)- E (r)]² HPR 44% 14 -16

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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