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Consider the following table: Stock Fund Bond Fund Scenario Probability Rate of Return Rate of Return Severe recession 0.05 40 % 9 % Mild recession
Consider the following table:
Stock Fund | Bond Fund | |||||||
Scenario | Probability | Rate of Return | Rate of Return | |||||
Severe recession | 0.05 | 40 | % | 9 | % | |||
Mild recession | 0.25 | 14 | % | 15 | % | |||
Normal growth | 0.40 | 17 | % | 8 | % | |||
Boom | 0.30 | 33 | % | 5 | % | |||
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 | %-Squared |
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