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Consider the following table: Stock Fund Bond Fund Scenario Probability Rate of Return Rate of Return Severe recession 0.05 26 % 11 % Mild recession
Consider the following table:
Stock Fund | Bond Fund | |||||||
Scenario | Probability | Rate of Return | Rate of Return | |||||
Severe recession | 0.05 | 26 | % | 11 | % | |||
Mild recession | 0.25 | 6 | % | 17 | % | |||
Normal growth | 0.40 | 11 | % | 10 | % | |||
Boom | 0.30 | 16 | % | 7 | % | |||
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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