Question: 6. Once again for the table below, assume the probabilities for the different economic scenarios to the following. Severe Recession probability = 10%, Mild Recession

 6. Once again for the table below, assume the probabilities for

6. Once again for the table below, assume the probabilities for the different economic scenarios to the following. Severe Recession probability = 10%, Mild Recession probability = 30%, Normal Growth probability = 35%, Boom probability = 25%. Using Excel, calculate the expected return and the Standard Deviation for if the portfolio is invested 50% in the stock fund and 50% in the bond fund using the above probabilities. A G - WON Scenario Severe recession Mild recession Normal growth Boom B D E F Portfolio invested 40% in stock fund and 60% in bond fund Rate Column B Deviation from of Expected Squared Probability Return Column Return Deviation .05 -20.2 - 1.01 -27.2 739.84 .25 4.6 1.15 -2.4 5.76 .40 10.4 4.16 3.4 11.56 .30 9.0 2.70 2.0 4.00 Expected retum: 7.00 Variance: Standard deviation: Column B Column F 36.99 1.44 4.62 1.20 44.26 6.65 7 9 10

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