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Consider the following table: Stock Fund Bond Fund Scenario Probability Rate of Return Rate of Return Severe recession 0.05 ?38% ?8% Mild recession 0.15 ?10%
Consider the following table:
Stock Fund | Bond Fund | ||
Scenario | Probability | Rate of Return | Rate of Return |
Severe recession | 0.05 | ?38% | ?8% |
Mild recession | 0.15 | ?10% | 5% |
Normal growth | 0.30 | 15% | 6% |
Boom | 0.50 | 25% | ?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.)
Mean return | % |
Variance | %-Squared |
|
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.)
Covariance %-Squared
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