Question
Rate of Return Scenario Probability Stocks Bonds Recession .30 8 % +21 % Normal economy .50 +22 +9 Boom .20 +32 +9 Consider a portfolio
| Rate of Return | |||||
| Scenario | Probability | Stocks | Bonds | ||
| Recession | .30 | 8 | % | +21 | % |
| Normal economy | .50 | +22 | +9 | ||
| Boom | .20 | +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? | |||
|
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MATLAB An Introduction With Applications
Authors: Amos Gilat
6th Edition
111938513X, 978-1119385134
