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Consider the following scenario analysis: Rate of Return Scenario Probability Stocks Bonds Recession 0.20 -5 % 14 % Normal economy 0.60 15 8 Boom 0.20
Consider the following scenario analysis:
| Rate of Return | |||||
| Scenario | Probability | Stocks | Bonds | ||
| Recession | 0.20 | -5 | % | 14 | % |
| Normal economy | 0.60 | 15 | 8 | ||
| Boom | 0.20 | 25 | 4 | ||
| Assume a portfolio with weights of .60 in stocks and .40 in bonds.
a. What is the rate of return on the portfolio in each scenario? (Do not round intermediate calculations. 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.) | |||||
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