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Consider the following scenario analysis: Scenario Recession Normal economy Boom Probability 0.20 0.60 0.20 Rate of Return Stocks Bonds -5% 14% 15 8 25 4

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Consider the following scenario analysis: Scenario Recession Normal economy Boom Probability 0.20 0.60 0.20 Rate of Return Stocks Bonds -5% 14% 15 8 25 4 Assume a portfolio with weights of 0.60 in stocks and 0.40 in bonds. a. What is the rate of return on the portfolio in each scenario? (Enter your answer as a percent rounded to 1 decimal place.) Recession Normal economy Boom Rate of Return % % % b. What are the expected rate of return and standard deviation of the portfolio? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Expected return Standard deviation % %

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