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Problem 11-13 Scenario Analysis (LO2) Consider the following scenario analysis: Scenario Recession Normal economy Boom Probability Stocks Bonds 0.20 8.50 9.30 -6% 18% 19 11

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Problem 11-13 Scenario Analysis (LO2) Consider the following scenario analysis: Scenario Recession Normal economy Boom Probability Stocks Bonds 0.20 8.50 9.30 -6% 18% 19 11 26 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 colculations. Enter your answers as a percent rounded to 1 decimal place.) Expected Rate Standard Deviation of Return Stocks Bonds

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