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Asset allocation of a portfolio consisting of a stock fund and bond fund. Assume the following returns and probabilities for a Stock and Bond fund
Asset allocation of a portfolio consisting of a stock fund and bond fund. Assume the following returns and probabilities for a Stock and Bond fund for each scenario: Scenario Probability Rate of Return Stocks Rate of Return Bonds Severe Recession .10 -37 -9 Mild Recession .20 -11 15 Normal Growth .35 14 8 Boom .35 30 -5 a) Calculate the expected return of stock fund? b) Calculate the Variance of the stock fund? c) Calculate the Standard Deviation of the stock fund? d) Calculate the covariance between the stock and the bond funds?
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