The following table shows the different states that may prevail in an economy next year, and their
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Question:
The following table shows the different states that may prevail in an economy next year, and their respective probabilities and the returns related to each state for a company.
Scenario | Probability | HPR(%) |
Severe recession | 0.07 | -15 |
Mild recession | 0.21 | -5 |
Normal growth | 0.50 | 8 |
Boom | 0.22 | 16 |
Using the information in the above table answer the following questions:
Calculate the expected return
Calculate the standard deviation
Related Book For
Modern Portfolio Theory and Investment Analysis
ISBN: 978-1118469941
9th edition
Authors: Edwin Elton, Martin Gruber, Stephen Brown, William Goetzmann
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