Question

Calculate the range of potential annual returns if you invested 10% in bonds and 90% in stocks. How does this compare with the range of potential annual returns if you invested 10% in stocks and 90% bonds?

Answer 1

Answer:

From the graph, if you invest 10% in bonds and 90% in stocks,  the range of potential return is given as +49.8% to -39.0% with a average of 9.9% whereas if investment is  made by 10% in stocks and 90% in bonds, then the range of annual returns would become +31.2% to -8.2% with a average of 6%.  Therefore, as the investment in stocks increases the average annual returns also increase.

Explanation:

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