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Please show how to solve the following Consider the following scenario analysis: Rate of Return Scenario Probability Stocks Bonds Recession 0.20 -5 % 14 %
Please show how to solve the following
Consider the following scenario analysis:
Rate of Return | |||||
Scenario | Probability | Stocks | Bonds | ||
Recession | 0.20 | -5 | % | 14 | % |
Normal economy | 0.60 | 15 | 8 | ||
Boom | 0.20 | 25 | 4 | ||
Assume a portfolio with weights of .60 in stocks and .40 in bonds.
a. What is the rate of return on the portfolio in each scenario? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.)
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