Consider the following table Stock Fund Bond Fund Scenario Probability Rate of Return Rate of Return Severe recession 0 05 46 16 Mild recession 0 20 22 0 11 Normal growth 0 30 5 2 Boom 0 45 42 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 4 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 4 decimal places )

Question

Consider the following table  Stock Fund Bond Fund Scenario Probability Rate of Return Rate of Return Severe recession 0 05 46  16  Mild recession 0 20 22 0  11  Normal growth 0 30 5  2  Boom 0 45 42  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 4 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 4 decimal places )

Accepted Answer

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		Stock Fund	Bond Fund
Scenario	Probability	Rate of Return	Rate of Return
Severe recession	0.05	46%	16%
Mild recession	0.20	22.0%	11%
Normal growth	0.30	5%	2%
Boom	0.45	42%	5%

Question

Consider the following table: Stock Fund Bond Fund Scenario Probability Rate of Return Rate of Return Severe recession 0.05 46% 16% Mild recession 0.20 22.0%

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