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14. rio Analysis. Consider the following scenario analysis: (LO11-2) Rate of Return Probability Stocks Bonds Scenario Recession Normal economy Boom 0.20 0.60 0.20 -5% +15

14. rio Analysis. Consider the following scenario analysis: (LO11-2) Rate of Return Probability Stocks Bonds Scenario Recession Normal economy Boom 0.20 0.60 0.20 -5% +15 +25 +14% +8 +4 pponduly Cost of Capital 273 a. Is it reasonable to assume that Treasury bonds will provide higher returns in recessions than in booms? b. Calculate the expected rate of return and standard deviation for each investment. c. Which investment would you prefer

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