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Consider the following scenario analysis: Scenario Probability Rate of Return Stocks Bonds Recession 0.20 5% 19% Normal economy 0.70 20% 10% Boom 0.10 32% 9%
Consider the following scenario analysis:
Scenario | Probability | Rate of Return | |
---|---|---|---|
Stocks | Bonds | ||
Recession | 0.20 | 5% | 19% |
Normal economy | 0.70 | 20% | 10% |
Boom | 0.10 | 32% | 9% |
- Calculate the expected rate of return and standard deviation for each investment.
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