Explore BrainMass

Explore BrainMass

    Expected rate of return and standard deviation

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Scenario Analysis. Consider the following scenario analysis:

    Rate of Return
    Scenario Probability Stocks Bonds
    Recession .20 -5% +14%
    Normal economy .60 +15 +8
    Boom .20 +25 +4

    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?

    © BrainMass Inc. brainmass.com June 3, 2020, 6:35 pm ad1c9bdddf
    https://brainmass.com/business/accounting/expected-rate-of-return-and-standard-deviation-66727

    Solution Preview

    Scenario Analysis. Consider the following scenario analysis:

    Rate of Return
    Scenario Probability Stocks ...

    Solution Summary

    This discusses the steps to compute the expected rate of return and standard deviation

    $2.19

    ADVERTISEMENT