Consider the following Scenario analysis:
                                                                      
                                        Rate of Return
Scenario	Probability	Stocks	Bonds 

Boom	         20	        -5%	 +14%
Normal economy	.60	        +15        +8
Recession	.20	        +25        +4

(a) Is it reasonable to assume that Treasury bonds will provide higher
returns in recession than in boom?

(b) Calculate the expected rate of return and standard deviation for
each investment.

(c) Which investment would you prefer and why?

Portfolio Analysis:
Use the data above and consider a portfolio with a weight 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 and why?


I need this by 11pm CST tonight 03/22/05