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Consider the following scenario analysis: Scenario Recession Normal economy Boom Rate of Return Probability Stocks Bonds 0.20 -5% 19% 0.60 20% 10% 0.20 27% 4%

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Consider the following scenario analysis: Scenario Recession Normal economy Boom Rate of Return Probability Stocks Bonds 0.20 -5% 19% 0.60 20% 10% 0.20 27% 4% a. Is it reasonable to assume that Treasury bonds will provide higher returns in recessions than in booms? ONo 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.) Expected Rate of Standard Deviation Return % % % % Stocks Bonds c. Which investment would you prefer? Stock Bond Which investment would you prefer

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