Calculate expected rate of return and standard deviation

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Reference no: EM131016105

Consider the following scenario analysis:

Rate of Return

Scenarrio Probability Stocks Bonds

Recession .20 −5 % 19 %

Normal economy .70 20 10

Boom .10 32 9

a. Is it reasonable to assume that Treasury bonds will provide higher returns in recessions than in booms?

Yes

b. Calculate the expected rate of return and standard deviation for each investment. (Do not round intermediate calculations. Enter your answers as a percent rounded to 1 decimal place.) Expected Rate of Return_________Standard Deviation

Stocks

Bonds

Reference no: EM131016105

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