Question
Consider the following table: Stock Fund Bond Fund Scenario Probability Rate of Return Rate of Return Severe recession 0.05 36% 11% Mild recession 0.20 12%
Consider the following table: |
Stock Fund | Bond Fund | ||
Scenario | Probability | Rate of Return | Rate of Return |
Severe recession | 0.05 | 36% | 11% |
Mild recession | 0.20 | 12% | 13% |
Normal growth | 0.40 | 15% | 4% |
Boom | 0.35 | 32% | 5% |
1A) Calculate the values of expected return for the stock fund. (Do not round intermediate calculations. Enter your answer as a decimal number round to 3 decimal place.)
1B) Calculate the values of variance for the stock fund. (Do not round intermediate calculations. Enter your answer as a decimal number round to 4 decimal place.)
1C) 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 5 decimal places.)
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