Question
Consider the following table: Scenario Probability Stock Fund Rate of Return Bond Fund Rate of Return Severe recession 0.10 36% 9% Mild recession 0.20 16%
Consider the following table:
| Scenario | Probability | Stock Fund Rate of Return | Bond Fund Rate of Return |
|---|---|---|---|
| Severe recession | 0.10 | 36% | 9% |
| Mild recession | 0.20 | 16% | 15% |
| Normal growth | 0.40 | 21% | 8% |
| Boom | 0.30 | 26% | 5% |
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 2 decimal places.)
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 2 decimal places.)
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AQA AS Accounting Unit 1 Introduction To Financial Accounting
Authors: Brendan Casey
1st Edition
1499789653, 978-1499789652
