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Calculate portfolio expected return

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Economy Probability

Stocks Bonds Recession 20% -5% 15% Normal 35% 10% 12% Good 35% 14% 11% Boom 10% 18% 9% Part A 1. Calculate expected return and standard deviation of each stock and bonds. 2. Which investment is less risky based on standard deviation? Part B (part B will be solved separately from part A. You can only take data from question number 3 and make portfolio. In case of any problem recheck zoom recording of Session 3) Being investor you decided to invest 60% in stocks and 40% in bonds.

1. Calculate portfolio expected return

2. Calculate portfolio standard deviation

3. Compare portfolio risk with individual stocks and bonds investment as you did in part A and suggest which option is better only stocks, only bonds or portfolio in terms of risk and return.

Reference no: EM132595058

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