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B,C 13. Scenario Analysis. Consider the following scenario analysis: (L011-2) Rate of Return Scenario Recession Normal economy Boom Probability 0.20 0.60 0.20 Stocks -5% +15

B,C
13. Scenario Analysis. Consider the following scenario analysis: (L011-2) Rate of Return Scenario Recession Normal economy Boom Probability 0.20 0.60 0.20 Stocks -5% +15 +25 Bonds +14% +8 +4 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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