Purchase Solution

The solution to Return on stocks and bonds

Not what you're looking for?

Ask Custom Question

Analyze the risk of a portfolio

Use the data below and consider portfolio weights of .60 in stocks and .40 in bonds.

Rate of Return
Scenario Probability Stocks Bonds
Recession 0.2 -5% 14%
Normal 0.6 15% 8%
Boom 0.2 25% 4%

a. What is the rate of return on the portfolio in each scenario?

b. What is the expected return and standard deviation of the portfolio?

c. Would you prefer to invest in the portfolio of stocks only or in bonds only?

Purchase this Solution

Solution Summary

The expected rate of return and standard deviation for investment in a portfolio of bonds and stocks is calculated, given the probability distribution of return on bonds and stocks.

Purchase this Solution

Free BrainMass Quizzes
Understanding the Accounting Equation

These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.

Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.

Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.


This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)