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Consider the following table: Stock Fund Bond Fund Scenario Probability Rate of Return Rate of Return Severe recession 0.10 46% 20% Mild recession 0.20 24%
Consider the following table:
Stock Fund | Bond Fund | ||
Scenario | Probability | Rate of Return | Rate of Return |
Severe recession | 0.10 | 46% | 20% |
Mild recession | 0.20 | 24% | 14% |
Normal growth | 0.30 | 8% | 5% |
Boom | 0.40 | 44% | 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 2 decimal places.)
Mean return | % |
Variance | |
|
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.)
Covariance
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