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Consider the following table: Stock Fund Rate of Return Scenario Bond Fund Rate of Return Probability Severe recession 0.05 -33% -12% Mild recession 0.25 -13%
Consider the following table: Stock Fund Rate of Return Scenario Bond Fund Rate of Return Probability Severe recession 0.05 -33% -12% Mild recession 0.25 -13% 18% Normal growth 11% 0.40 0.30 18% 23% Boom -8% 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 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
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