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Calculate the expected rate of return and standard deviation

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Reference no: EM132485318

Consider the following scenario analysis:

                            Scenario Probability Rate of Return

                                         Stocks                            Bonds

Recession                          0.2               -4%             16%

Normal economy                 0.50               18%               9%

Boom                                0.30               29%               6%

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

Question 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.)

Reference no: EM132485318

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