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Assignment 6 Saved 3 Problem 11-13 Scenario Analysis (LO2) Consider the following scenario analysis: 10 points Scenario Recession Normal economy Boom Probability 0.2e 0.50 0.30
Assignment 6 Saved 3 Problem 11-13 Scenario Analysis (LO2) Consider the following scenario analysis: 10 points Scenario Recession Normal economy Boom Probability 0.2e 0.50 0.30 Rate of Return Stocks Bonds -9% 20% 21% 8% 31% 8% eBook a. Is it reasonable to assume that Treasury bonds will provide higher returns in recessions than in booms? Print O No References O Yes b. Calculate the expected rate of return and standard deviation for each investment. (Do not round intermediate calculations. Enter your answers as a percent rounded to 1 decimal place.) Expected Rate of Return Standard Deviation Stocks % % Bonds % % c. Which investment would you prefer? Stock Bond Which investment would you prefer
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