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Consider the following scenario analysis: Rate of Return Scenario Probability Stocks Bonds Recession 0.3 -8% 16% Normal economy 0.4 17 9 Boom 0.3 22 3
Consider the following scenario analysis:
Rate of Return
Scenario Probability Stocks Bonds
Recession 0.3 -8% 16%
Normal economy 0.4 17 9
Boom 0.3 22 3
Assume a portfolio with weights of 0.60 in stocks and 0.40 in bonds.
a. What is the rate of return on the portfolio in each scenario? (Enter your answer as a percent rounded to 1 decimal place.)
Rate of Return | |
Recession | % |
Normal Economy | % |
Boom | % |
b. What are the expected rate of return and standard deviation of the portfolio? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Expected Return | % |
Standard Deviation | % |
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