consider the following scenario analysis:

Rate of return

Scenario Probability stocks Bonds

Recession 0.2 -7% 13%

Normal Economy 0.5 14 9

Boom 0.3 27 4

Assume a portfolio with weights of 0.60 in stocks and 0.40 in bonds.

a. What is the rate of return in each scenario??

Recession _____%

Normal economy ______%

Boom _______%

What are the expected rate of return and standard deviation of the portfolio??

Expected return ____%

Standard deviation _____%