Consider the following scenario analysis Rate of Return Scenario Probability Stocks Bonds Recession 1 3 14 45 Normal economy 1 3 12 10 Boom 1 3 38 25 (a) What is the expected rate of return of the stocks What is the expected rate of return of the bonds (b) What is the standard deviation of the retu...

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Consider the following scenario analysis: Rate of Return Scenario Probability Stocks Bonds Recession 1/3 -14% 45% Normal

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Consider the following scenario analysis:

		Rate of Return
Scenario	Probability	Stocks	Bonds
Recession	1/3	-14%	45%
Normal economy	1/3	12%	10%
Boom	1/3	38%	-25%

(a) What is the expected rate of return of the stocks? What is the expected rate of return of the bonds?

(b) What is the standard deviation of the return of the stocks? What is the standard deviation of the return of the bonds?

Posted Date: Jul 03, 2024 10:35 AM

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Consider the following scenario analysis: Rate of Return Scenario Probability Stocks Bonds Recession 1/3 -14% 45% Normal

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