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Consider the following scenario analysis Rate of Return Scenario Recession Probability Stocks Bonds -4 % 0.40 19% 0.50 20 Normal economy 0.10 Boom 26 a.

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Consider the following scenario analysis Rate of Return Scenario Recession Probability Stocks Bonds -4 % 0.40 19% 0.50 20 Normal economy 0.10 Boom 26 a. Is it reasonable to assume that Treasury bonds will provide higher returns in recessions than in booms? No Yes b. Calculate the expected rate of return and standard deviation for each investment. (Do not round intermediate calculations. Enter your answers as a percent rounded to 1 decimal place.) Answer is not complete. Expected Rate of Return Standard Deviation 11.00% Stocks Bonds 12.9 %

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