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Consider the following scenario analysis: Rate of Return Scenario Probability Stocks Bonds Recession 0.3 -6 % 14 % Normal economy 0.5 15 11 Boom 0.2
Consider the following scenario analysis:
Rate of Return | |||||
Scenario | Probability | Stocks | Bonds | ||
Recession | 0.3 | -6 | % | 14 | % |
Normal economy | 0.5 | 15 | 11 | ||
Boom | 0.2 | 26 | 5 | ||
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.)
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.)
Consider the following scenario analysis: Scenario Recession Normal economy Boom Probability 0.3 0.5 0.2 Rate of Return Stocks Bonds -6% 14% 15 11 26 5 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.) Recession Normal economy Boom Rate of Return 0.6% 26.8 % 88.01% 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.) 38.47% Expected return Standard deviation %
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