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Problem 11-18 Portfolio Analysis (LO3) Consider the following scenario analysis: Scenario Probability Rate of Return Stocks Bonds Recession 0.2 7% 15% Normal economy 0.7 16
Problem 11-18 Portfolio Analysis (LO3)
Consider the following scenario analysis:
| Scenario | Probability | Rate of Return | |
|---|---|---|---|
| Stocks | Bonds | ||
| Recession | 0.2 | 7% | 15% |
| Normal economy | 0.7 | 16 | 7 |
| Boom | 0.1 | 25 | 6 |
Assume a portfolio with weights of 0.60 in stocks and 0.40 in bonds.
- What is the rate of return on the portfolio in each scenario?
- What are the expected rate of return and standard deviation of the portfolio?
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AQA AS Accounting Unit 1 Introduction To Financial Accounting
Authors: Brendan Casey
1st Edition
1499789653, 978-1499789652
