Problem 11-13 Scenario Analysis (LO2) Consider the following scenario analysis: Scenario Recession Normal economy Boom Probability 0.20 0.70 0.10 Required A Required B Required C Rate of Return a. Is it reasonable to assume that Treasury bonds will provide higher returns in recessions than in booms? b. Calculate the expected rate of return and standard deviation for each investment. c. Which investment would you prefer? Which investment would you prefer? Stocks -9% Complete this question by entering your answers in the tabs below. Which investment would you prefer? 22% 25% Bonds 21% 9% 5% Stock more risk-averse

Problem 11-13 Scenario Analysis (LO2) Consider the following scenario analysis: a. Is it reasonable to assume that. Treasury bonds will provide higher returns in recessions than in booms? b. Calculate the expected rate of return and standard deviation for each investment: c. Which investment would you prefer? Complete this question by entering your answers in the tabs below. Which investment would you prefer