Question
Consider the following table: Stock Fund Bond Fund Scenario Probability Rate of Return Rate of Return Severe recession 0.15 ?34% ?10% Mild recession 0.20 ?18%
Consider the following table: |
|
| Stock Fund | Bond Fund |
Scenario | Probability | Rate of Return | Rate of Return |
Severe recession | 0.15 | ?34% | ?10% |
Mild recession | 0.20 | ?18% | 6% |
Normal growth | 0.35 | 14% | 7% |
Boom | 0.30 | 24% | ?3% |
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 4 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 4 decimal places.) |
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