# Scenario & Portfolio Analysis for a Return on Stocks and Bonds

Not what you're looking for?

1) SCENARIO ANALYSIS: Consider the following scenario-analysis

RATE OF RETURN

Scenerio 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. How do I calculate the

expected rate of return and standard deviation for each investment?

c. And which investments would you prefer?

2) PORTFOLIO ANALYSIS: Using the data in the above problem and considering a portfolio with weights of .60 in stocks and .40 in bonds.

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

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

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

##### Purchase this Solution

##### Solution Summary

The expected rate of return and standard deviation for investment in bonds and stocks is calculated, given the probability distribution of return. Also, the expected rate of return and standard deviation for investment in a portfolio of bonds and stocks is calculated. This solution is provided in an attached Excel file.

##### Purchase this Solution

##### Free BrainMass Quizzes

##### IPOs

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

##### 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.

##### Motivation

This tests some key elements of major motivation theories.

##### Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

##### Lean your Process

This quiz will help you understand the basic concepts of Lean.