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Consider the following scenario analysis: Scenario Recession Normal economy Boom Probability 0.20 0.70 0.10 Rate of Return Stocks Bonds -9% 21% 22% 25% 5% a.
Consider the following scenario analysis: Scenario Recession Normal economy Boom Probability 0.20 0.70 0.10 Rate of Return Stocks Bonds -9% 21% 22% 25% 5% a. Is it reasonable to assume that Treasury bonds will provide higher returns in recessions than in booms? O No O 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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