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Consider the following table: Scenario Severe recession Mild recession Normal growth Boom Probability 0.05 0.25 0.40 0.30 Stock Fund Rate of Return -28% -8% 13%
Consider the following table: Scenario Severe recession Mild recession Normal growth Boom Probability 0.05 0.25 0.40 0.30 Stock Fund Rate of Return -28% -8% 13% 18% Bond Fund Rate of Return -13% 19% 12% -9% 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.) Answer is complete but not entirely correct. Mean return 7.2 % Variance 0.02 X 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.) X Answer is complete but not entirely correct. Covariance (0.01)
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