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3 Consider the following table: 10 points Scenario Severe recession Mild recession Normal growth Boom Probability 0.10 0.20 0.35 0.35 Stock Fund Rate of Return

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3 Consider the following table: 10 points Scenario Severe recession Mild recession Normal growth Boom Probability 0.10 0.20 0.35 0.35 Stock Fund Rate of Return -38% -6.0% 10% 40% Bond Fund Rate of Return -14% 10% 4% 4% a. Calculate the values of mean return and variance for the stock fund. (Do not round intermediate calculations. Round "Mean return" value to 1 decimal place and "Variance" to 4 decimal places.) Answer is complete but not entirely correct. Mean return 12.5% %- 59.0400 X Squared Variance b. Calculate the value of the covariance between the stock and bond funds. (Negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 4 decimal places.) Answer is complete but not entirely correct. Covariance 0.6900 X %- Squared

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