Consider the following scenario
Scenario
Prob.
Stocks
Bonds
Recession
0.2
-5%
14%
Normal
0.6
15%
8%
Boom
0.2
25%
4%
What is the expected returns for each investment?
Bonds, Stock and a Portfolio ( 40% in bonds, 60% in Stock)
What the risk for each investment is?
Bonds, Stock and a Portfolio ( 40% in bonds, 60% in Stock)