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Consider the following table Stock Fund Bond Fund Scenario Probability Rate of Return Rate of Return Severe recession 0.05 28% 10% Mild recession 0.25 8%
| Consider the following table |
| Stock Fund | Bond Fund | ||
| Scenario | Probability | Rate of Return | Rate of Return |
| Severe recession | 0.05 | 28% | 10% |
| Mild recession | 0.25 | 8% | 12% |
| Normal growth | 0.40 | 4% | 2% |
| Boom | 0.30 | 42% | 7% |
Calculate the values of mean return and variance for the stock fund.
Mean Return %=
Variance=
Calculate the value of the covariance between the stock and bond funds.
Covariance=
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