Consider the following information: State of Economy Recession Normal Boom Probability of State Rate of Return if of Economy State Occurs Calculate the expected return. .10 .60 .30 -.17 .08 .27

You own a portfolio with the following expected returns given the various states of the economy. What is the overall portfolio expected return? State of Economy Boom Normal Recession 0.0701 O 0.0648 0,0719 O 0.0548 Expected returns in various states of the economy Probability 0.0442 23.00% 70.00% 7.00% 13.00% 7.00% -10.00% Rate of Return

Q222

Nikul

es Consider the following information: State of Economy Recession Boom Probability of State of Expected return Economy .28 72 Portfolio Return if State Occurs Calculate the expected return. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) -.13 .23 %

The stage in which the economy hits a peak is called:   Group of answer choices a. expansion. b. contraction. c. stagnation. d. recession. e. depression.

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Consider the following scenario analysis: Scenario Recession Normal economy Boom Probability 0.20 0.60 0.20 Required A Required B Required C Rate of Return Stocks -7% 22% 33% Stocks Bonds a. Is it reasonable to assume that Treasury bonds will provide higher returns in recessions than in booms? b. Calculate the expected rate of return and standard deviation for each investment. c. Which investment would you prefer? Expected Rate of Return 16.4 % 11.4 % Bonds 20% Complete this question by entering your answers in the tabs below. 11% 7% You received partial credit in the previous attempt. Calculate the expected rate of return and standard deviation for each investment. Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 1 decimal place. Standard Deviation 12.5 % 13.9 %

Mansukh

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