Question

Use the following information to answer the next three questions Scenario Probability Return on Value Stock...

Use the following information to answer the next three questions

Scenario

Probability

Return on Value Stock Fund

Return on Income Stock Fund

Recession

0.25

-14%

-12%

Normal Growth

0.25

17%

6%

Boom

0.50

33%

5%

Expected Return

1.00%

Standard Deviation

7.52%

What is the expected return on Value Stock Funds?

16.25%

15.45%

17.25%

-18.25%

What is the standard deviation of Value Stock Funds?

14.25%

19.19%

16.19%

22.25%

What is the expected return if you invested 80% in value stock funds and 20% in income stock funds?

12.25%

14.50%

12.00%

14.00%
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