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Consider following Scenario Analysis State of Economy Probability Stocks Bonds Recession 0.2 -8% 18% Normal Economy 0.4 16% 9% Boom 0.4 22% 3% a) Calculate

Consider following Scenario Analysis

State of Economy Probability Stocks Bonds
Recession 0.2 -8% 18%
Normal Economy 0.4 16% 9%
Boom 0.4 22% 3%

a) Calculate the expected return of Stocks? b) Which investment is least risky on the basis of co-efficient of variation (CV)? Also which option you think its better for investment? c) Calculate the portfolio standard deviation? d) Calculate the Portfolio Expected Return if funds allocation is 60% in stocks and 40% in bonds?

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