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Consider the following scenario analysis: Scenario Recession Normal economy Bloon Probability 0.20 0.60 0.20 Required A Required B Required C a. Is it reasonable

 

Consider the following scenario analysis: Scenario Recession Normal economy Bloon Probability 0.20 0.60 0.20 Required A Required B Required C a. Is it reasonable to assume that Treasury bonds will provide higher returns in recessions than in booms? b. Calculate the expected rate of return and standard deviation for each investment. c. Which investment would you prefer? Stocks Bonds Expected Rate of Return 16.0 % 12.4 % Rate of Return Stocks -8% Complete this question by entering your answers in the tabs below. 211 25% Standard Deviation Bonds 20% 124 61 Calculate the expected rate of return and standard deviation for each investment. Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 1 decimal place. Answer is complete but not entirely correct. 1.3% 4.5%

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