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Question 4....Help please :) Problem - Portfolio Analysis Assume Deniz constructs a portfolio with weights of 0.60 in stocks and 0.40 in bonds. There is
Question 4....Help please :)
Problem - Portfolio Analysis Assume Deniz constructs a portfolio with weights of 0.60 in stocks and 0.40 in bonds. There is a 0.3 chance that a recession will occur, with stocks earning a -3% return and bonds earning a 12% return. There is a 0.6 chance that the economy will return to normal, in which case stocks will return 13% and bonds would return 8%. Finally, there is a 0.1 chance that a boom will occur, in which case equities will gain 26% and bonds will yield 3%. Rate of Return Probability Stocks Bonds Recession Normal economy Boom Scenario 0.3 3.6 0.1 : -3% 13% 26% 12% 8$ 31 a. Calculate the rate of return on Deniz's portfolio in each scenario? (Enter your answer as a percent rounded to 1 decimal place.) Rate of Return Roconuon Noma onomy Step by Step Solution
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