Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Rate of Return
Scenario
Probability Stocks
Bonds
Recession
0.20
-4
194
Normal economy
0.40
20
Boom
0.40
264
a. Is it reasonable to assume that Treesury bonds will provide higher returns in recessions than in booms?
No
Yes
b. Calculate the expected rate of return ond stondard deviation for esch investment. (Do not round Intermediate calculations. Enter
your answers as a percent rounded to 1 decimal place.)
O Answer is complete but not entirely correct.
Expected Rate of Return
standard Devlation
Stocks
17.6
12.3 0 %
Bonds
10.6
0.1
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Transcribed Image Text:Rate of Return Scenario Probability Stocks Bonds Recession 0.20 -4 194 Normal economy 0.40 20 Boom 0.40 264 a. Is it reasonable to assume that Treesury bonds will provide higher returns in recessions than in booms? No Yes b. Calculate the expected rate of return ond stondard deviation for esch investment. (Do not round Intermediate calculations. Enter your answers as a percent rounded to 1 decimal place.) O Answer is complete but not entirely correct. Expected Rate of Return standard Devlation Stocks 17.6 12.3 0 % Bonds 10.6 0.1
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