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What is the rate of return on the portfolio in each scenario

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Reference no: EM132986499

Question - Consider the following scenario analysis:

 

Rate of Return

Scenario

Probability

Stocks

Bonds

Recession

0.3

-4%

16%

Normal economy

0.5

17

10

Boom

0.2

26

3

Assume a portfolio with weights of 0.60 in stocks and 0.40 in bonds.

Required -

a. What is the rate of return on the portfolio in each scenario?

b. What are the expected rate of return and standard deviation of the portfolio?

Reference no: EM132986499

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