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

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hsider the following scenario analysis: Scenario Recession Normal economy Boom Rate of Return Probability Stocks 0.20 -5% Bonds 14% 0.60 15% 8% 0.20 25% 4% a. Is it reasonable to assume that Treasury bonds will provide higher returns in recessions than in booms? Yes No 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.) Answer is complete but not entirely correct. Expected Rate of Standard Deviation Return Stocks 13.0 % 8.4 % Bonds 31.0 % 3.2 %

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