Rate of Return Scenario Probability Stocks Bonds Recession 20 5 19 Normal economy 70 20 10 Boom 10 32 9 Consider a portfolio with weights of 6 in stocks and 4 in bonds a What is the rate of return on the portfolio in each scenario (Do not round intermediate calculations Round your answers to 1 decimal place ) Scenario Rate of Return Recession Normal economy Boom b What are the expected rate of return and standard deviation of the portfolio (Do not round intermediate calculations Round your answers to 2 decimal places ) Expected rate of return Standard deviation c Which investment would you prefer Portfolio Bonds Stocks Rate of Return Probability Stocks Scenario Recession Normal economy Boom Bonds 19 20 70 10 5 20 32 Consider a portfolio with weights of 6 in stocks and 4 in bonds a What is the rate of return on the portfolio in each scenario (Do not round intermediate calculations Round your answers to 1 decimal place ) Scenario Rate of Return Recession Normal economy Boom b What are the expected rate of return and standard deviation of the portfolio (Do not round intermediate calculations Round your answers to 2 decimal places ) Expected rate of return Standard deviation c Which investment would you prefer Portfolio Bonds Stocks

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Rate of Return Scenario Probability Stocks Bonds Recession .20 ?5 % +19 % Normal economy .70 +20 +10 Boom .10 +32 +9 Consider a portfolio

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		Rate of Return
Scenario	Probability	Stocks		Bonds
Recession	.20	?5	%	+19	%
Normal economy	.70	+20		+10
Boom	.10	+32		+9

Consider a portfolio with weights of .6 in stocks and .4 in bonds.

a.	What is the rate of return on the portfolio in each scenario? (Do not round intermediate calculations. Round your answers to 1 decimal place.)

Scenario	Rate of Return
Recession	%
Normal economy	%
Boom	%

b.	What are the expected rate of return and standard deviation of the portfolio? (Do not round intermediate calculations. Round your answers to 2 decimal places.)


Expected rate of return	%
Standard deviation	%

Which investment would you prefer?

	Portfolio
	Bonds
	Stocks

Rate of Return Probability Stocks Scenario Recession Normal economy Boom Bonds +19% 20 .70 .10 5% +20 +32 Consider a portfolio with weights of.6 in stocks and .4 in bonds. a. What is the rate of return on the portfolio in each scenario? (Do not round intermediate calculations. Round your answers to 1 decimal place.) Scenario Rate of Return Recession Normal economy Boom b. What are the expected rate of return and standard deviation of the portfolio? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Expected rate of return Standard deviation c. Which investment would you prefer? Portfolio Bonds Stocks