Consider the following scenario analysis:

Rate of Return

Scenario

Probability

Stocks

Bonds

Recession

.40

4

%

+19

%

Normal economy

.50

+20

+9

Boom

.10

+26

+8

a.) Is it reasonable to assume that Treasury bonds will provide higher returns in recessions than in booms? (Y/N)

b.	Calculate the expected rate of return and standard deviation for each investment. (Do not round intermediate calculations. Round your answers to 1 decimal place.)

	Expected Rate of Return	Standard Deviation
Stocks	%	%
Bonds	%	%

c.) Which investment would you prefer? (Stocks or Bonds)