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Consider the following scenario analysis: Rate of Return Stocks Bonds Scenario Recession Normal economy Probability 0.2 0.5 0.3 -5% 18 17% 11 Boom 23 4 Assume a portfolio with weights of 0.60 in stocks and 0.40 in bonds. a. What is the rate of return on the portfolio in each scenario? (Enter your answer as a percent rounded to 1 decimal place.) Rate of Return Recession % Normal economy % Вoom b. What are the expected rate of return and standard deviation of the portfolio? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Expected return % Standard deviation %

Consider the following scenario analysis: Rate of Return Stocks Bonds Scenario Recession Normal economy Probability 0.2 0.5 0.3 -5% 18 17% 11 Boom 23 4 Assume a portfolio with weights of 0.60 in stocks and 0.40 in bonds. a. What is the rate of return on the portfolio in each scenario? (Enter your answer as a percent rounded to 1 decimal place.) Rate of Return Recession % Normal economy % Вoom b. What are the expected rate of return and standard deviation of the portfolio? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Expected return % Standard deviation %

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Consider the following scenario analysis: Rate of Return Probability 0.2 Stocks -5% 18 23 Bonds Scenario Recession Normal economy 17% 11 0.5 Вoom 0.3 4 Assume a portfolio with weights of 0.60 in stocks and 0.40 in bonds. a. What is the rate of return on the portfolio in each scenario? (Enter your answer as a percent rounded to 1 decimal place.) Rate of Return Recession % Normal economy % Вoom % b. What are the expected rate of return and standard deviation of the portfolio? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Expected return % Standard deviation
Transcribed Image Text:Consider the following scenario analysis: Rate of Return Probability 0.2 Stocks -5% 18 23 Bonds Scenario Recession Normal economy 17% 11 0.5 Вoom 0.3 4 Assume a portfolio with weights of 0.60 in stocks and 0.40 in bonds. a. What is the rate of return on the portfolio in each scenario? (Enter your answer as a percent rounded to 1 decimal place.) Rate of Return Recession % Normal economy % Вoom % b. What are the expected rate of return and standard deviation of the portfolio? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Expected return % Standard deviation
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Consider the following scenario analysis: Scenario Recession Normal economy Boom Recession Normal economy Boom Probability 0.3 8.6 0.1 Expected return Standard deviation Assume a portfolio with weights of 0.60 in stocks and 0.40 in bonds. a. What is the rate of return on the portfolio in each scenario? (Enter your answer as a percent rounded to 1 decimal place.) Rate of Return 2.0 % 12.2 % 16.4 % Rate of Return Stocks -6% 15 24 Bonds 14% 8 5 b. What are the expected rate of return and standard deviation of the portfolio? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) 11.20 % %
Transcribed Image Text:Consider the following scenario analysis: Scenario Recession Normal economy Boom Recession Normal economy Boom Probability 0.3 8.6 0.1 Expected return Standard deviation Assume a portfolio with weights of 0.60 in stocks and 0.40 in bonds. a. What is the rate of return on the portfolio in each scenario? (Enter your answer as a percent rounded to 1 decimal place.) Rate of Return 2.0 % 12.2 % 16.4 % Rate of Return Stocks -6% 15 24 Bonds 14% 8 5 b. What are the expected rate of return and standard deviation of the portfolio? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) 11.20 % %
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