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8. Suppose that $1 invested in a stock fund yields R, and that $1 invested in a bond fund yields R, after 1 year.
8. Suppose that $1 invested in a stock fund yields R, and that $1 invested in a bond fund yields R, after 1 year. We know that: R, has a mean of 0.09 (9%) and a standard deviation of 0.08 R has a mean of 0.06 (6%) and a standard deviation of 0.05 The correlation between R, and R is 0.29 If you have $1 to invest today and put a fraction w in the stock fund and the rest into the bond fund, then in one year the return on your investment is R = w Rs+ (1-w) Rb. Compute the mean and the standard deviation of R if w = 0.58.
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