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Consider the following table: Stock Fund Bond Fund Scenario Probability Rate of Return Rate of Return Severe recession 0.10 -32% -17% Mild recession 0.20 -22%

Consider the following table:

Stock Fund

Bond Fund

Scenario

Probability

Rate of Return

Rate of Return

Severe recession

0.10

-32%

-17%

Mild recession

0.20

-22%

15%

Normal growth

0.40

15%

6%

Boom

0.30

35%

4%

b.

Calculate the values of mean return and variance for the stock fund.

c.

Calculate the value of the covariance between the stock and bond funds.

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