Question: Suppose your expectations regarding the a stock return are as follows: State of the Market Probability HPR (including dividends) Boom 0.20 45% Normal growth 0.45

Suppose your expectations regarding the a stock return are as follows:

State of the Market

Probability
HPR (including dividends)
Boom

0.20
45%
Normal growth

0.45
15%
Recession

0.35
−20%


Compute the mean and standard deviation of the HPR on the stock?

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