Question
Consider the following table: Stock Fund Bond Fund Scenario Probability Rate of Return Rate of Return Severe recession 0.05 41% 18% Mild recession 0.25 11%
Consider the following table: Stock Fund Bond Fund Scenario Probability Rate of Return Rate of Return Severe recession 0.05 41% 18% Mild recession 0.25 11% 14% Normal growth 0.40 13% 5% Boom 0.30 34% 6% b. Calculate the values of expected return and variance for the stock fund. (Do not round intermediate calculations. Enter "Expected return" value as a percentage rounded to 1 decimal place and "Variance" as decimal number rounded to 4 decimal places.) Expected return 10.6 % Variance .0416 c. 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. Enter your answer as a decimal number rounded to 4 decimal places.) Covariance ????????
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