You are doing some financial projections based on different scenarios for the economy. You believe there is a 10% chance that we will have a strong growth economy, a 20% chance that we will have a growth economy, a 40% chance that we will have a normal economy, a 10% chance that we will have a recession and a 20% chance that we will have a depression. Your expected Stock Fund returns for the scenarios are 24%, 16%, 15%, -8% and -12%, respectively. For your Bond Fund, your expected returns are -7%, -2%, 6%, 2% and -5%, respectively. If you create a Risky Portfolio with a 80/20 mix of Bonds/Stocks, what is the expected volatility of the Portfolio? Group of answer choices 5.36% 11.23% 6.58% 7.84% None of the above
You are doing some financial projections based on different scenarios for the economy. You believe there is a 10% chance that we will have a strong growth economy, a 20% chance that we will have a growth economy, a 40% chance that we will have a normal economy, a 10% chance that we will have a recession and a 20% chance that we will have a depression. Your expected Stock Fund returns for the scenarios are 24%, 16%, 15%, -8% and -12%, respectively. For your Bond Fund, your expected returns are -7%, -2%, 6%, 2% and -5%, respectively.
If you create a Risky Portfolio with a 80/20 mix of Bonds/Stocks, what is the expected volatility of the Portfolio?
Group of answer choices
5.36%
11.23%
6.58%
7.84%
None of the above
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