Scenario Recession Normal economy Boom Probability 0.30 0.60 0.10 a. Is it reasonable to assume that Treasury bonds will provide higher returns in recessions than in booms? b. Calculate the expected rate of return and standard deviation for each investment. c. Which investment would you prefer? Required A Required B Required C Stocks Bonds Complete this question by entering your answers in the tabs below. Expected Rate of Return 13.2 % 9.3 X % Rate of Return Stocks -6% 18% 26% Calculate the expected rate of return and standard deviation for each investment. Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 1 decimal place. Bonds 15% 8% 5% Standard Deviation Answer is complete but not entirely correct. 14.0 X % 4.0 X %

a. Is it reasonable to assume that Treasury bonds will provide higher returns in recessions than in booms? b. Calculate the expected rate of return and standard deviation for each investment. c. Which investment would you prefer? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Calculate the expected rate of return and standard deviation for each investment. Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 1 decimal place