Question: Problem 11-13 Scenario Analysis (LO2) Consider the following scenario analysis: Scenario Recession Normal economy Boom Rate of Return Probability Stocks Bonds 0.30 --78 188 0.60

Recession Normal economy Boom Rate of Return Probability Stocks Bonds 0.30 --78

Problem 11-13 Scenario Analysis (LO2) Consider the following scenario analysis: Scenario Recession Normal economy Boom Rate of Return Probability Stocks Bonds 0.30 --78 188 0.60 20 10 0.10 26 3 a. Is it reasonable to assume that Treasury bonds will provide higher returns in recessions than in booms? O 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 percent rounded to 1 decimal place.) + Expected Rate of Return % Stocks Standard Deviation % % Bonds %

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