Consider the following scenario analysis: Scenario Recession Normal economy Вoom Probability Stocks 0.20 0.60 0.20 Rate of Return Bonds 20% 12% 6% -8% 21% 25% a. Is it reasonable to assume that Treasury bonds will provide higher returns in recessions than in booms? O No O 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 Standard Deviation Stocks % % Bonds % %

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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hi there, i need answer for a and b. thankssss

Consider the following scenario analysis:
E TIT
Rate of Return
Scenario
Probability
0.20
0.60
0.20
Stocks
Recession
Normal economy
-8%
21%
25%
Bonds
20%
12%
6%
Вoom
a. Is it reasonable to assume that Treasury bonds 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 percent rounded to 1 decimal place.)
Expected Rate of
Return
Standard Deviation
Stocks
%
%
Bonds
Transcribed Image Text:Consider the following scenario analysis: E TIT Rate of Return Scenario Probability 0.20 0.60 0.20 Stocks Recession Normal economy -8% 21% 25% Bonds 20% 12% 6% Вoom a. Is it reasonable to assume that Treasury bonds 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 percent rounded to 1 decimal place.) Expected Rate of Return Standard Deviation Stocks % % Bonds
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