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Consider the following table: Stock Fund Bond Fund Scenario Probability Rate of Return Rate of Return Severe recession 0.05 32% 11% Mild recession 0.25 12%
Consider the following table:
Stock Fund | Bond Fund | ||
Scenario | Probability | Rate of Return | Rate of Return |
Severe recession | 0.05 | 32% | 11% |
Mild recession | 0.25 | 12% | 17% |
Normal growth | 0.40 | 17% | 10% |
Boom | 0.30 | 22% | 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.)
Mean return | % | |
Variance | %-Squared | |
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b. Calculate the value of the covariance between the stock and bond funds.
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