Consider the following scenario analysis: 

Rate of Return Scenario Probability Stocks Bonds Recession 0.30 –7% 18% Normal Economy 0.60 20 10 Boom 0.10 26 3 a. Is it reasonable to assume that Treasuries will provide higher returns in recessions than in booms? No Yes

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

Answer rating: 100% (QA)

a No it is not reasonable to assume that Treasuries will provide higher returns in recessions than in booms Typically Treasuries are considered safer ... View the full answer