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 %

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter8: Risk And Rates Of Return

Section: Chapter Questions

Problem 9PROB

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