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5.8 You plan to invest $1,000 in a corporate bond fund or in a common stock fund. The following table presents the annual return (per
5.8 You plan to invest $1,000 in a corporate bond fund or in a common stock fund. The following table presents the annual return (per $1,000) of each of these investments under various economic conditions and the probability that each of these economic condi- tions will occur. Economic Corporate Common Prohahility Condition Bond Fund Stock Fund 0.01 Extreme recession -300 999 0.09 Recession 70 -300 0. 15 Stagnation 30 100 0.35 Slow growth 60 100 0.30 Moderate growth 100 150 0.10 High growth 120 350 Compute the a. expected return for the corporate bond fund and for the common stock fund. I). standard deviation for the corporate bond fund and for the common stock fund. c. Would you invest in the corporate bond fund or the common stock fund? Explain. d. If you chose to invest in the common stock fund in (c), what do you think about the possibility of losing $999 of every $1.000 invested if there is an extreme recession
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