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Consider the following scenario analysis: Scenario Recession Normal economy Boom Rate of Return Probability Stocks Bonds 0.30 -8% 21% 0.5e 22 9 0.2e 32 9
Consider the following scenario analysis: Scenario Recession Normal economy Boom Rate of Return Probability Stocks Bonds 0.30 -8% 21% 0.5e 22 9 0.2e 32 9 a. Is It reasonable to assume that Treasury bonds will provide higher returns In recessions than in booms? O 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.) Stocks Bonds Expected Rate of Return 15.0 % 15.4% Standard Deviation 12.6% 5.5 %
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