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Consider the following table: Stock Fund Rate of Return Bond Fund Rate of Return Scenario Probability 0.05 -25% Severe recession Mild recession Normal growth -10%
Consider the following table: Stock Fund Rate of Return Bond Fund Rate of Return Scenario Probability 0.05 -25% Severe recession Mild recession Normal growth -10% 16% 0.25 -5% 0.40 10% 9% Boom 0.30 15% -6% Required: 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 (5.3) % 736.19 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 2 decimal places.) Covariance 15.38
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