Consider the following scenario analysis:

Scenario: Rate of return Probability stocks / bonds

Recession 0.30 -4 % / 16%

Normal economy 0.50 17% / 10 %

Boom 0.20 28% / 9%

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

c. Which investment would you prefer?