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Could you please solve these problems and include the steps Do bonds reduce the overall risk of an investment portfolio? Let x be a random
Could you please solve these problems and include the steps
Do bonds reduce the overall risk of an investment portfolio? Let x be a random variable representing annual percent return for Vanguard Total Stock Index (all stocks). Let y be a random variable representing annual return for Vanguard Balanced Index (60% stock and 40% bond). For the past several years, we have the following data. x: 24 0 12 38 33 24 24 -13 -14 -12 y: 20 -1 15 26 24 19 16 -9 -1 -4 LO USE SALT (a) Compute Ex, Ex2, Ey, Ey2. Ex Ex2 Ey2 (b) Use the results of part (a) to compute the sample mean, variance, and standard deviation for x and for y. (Round your answers to four decimal places.) (c) Compute a 75% Chebyshev interval around the mean for x values and also for y values. (Round your answers to two decimal places.) Lower Limit Upper Limit Use the intervals to compare the two funds. O 75% of the returns for the balanced fund fall within a narrower range than those of the stock fund. O 75% of the returns for the stock fund fall within a narrower range than those of the balanced fund. O 25% of the returns for the balanced fund fall within a narrower range than those of the stock fund. O 25% of the returns for the stock fund fall within a wider range than those of the balanced fund. (d) Compute the coefficient of variation for each fund. (Round your answers to the nearest whole number.) X CV 1% Use the coefficients of variation to compare the two funds. O For each unit of return, the stock fund has lower risk. O For each unit of return, the balanced fund has lower risk. O For each unit of return, the funds have equal risk. If s represents risks and x represents expected return, then s/x can be thought of as a measure of risk per unit of expected return. In this case, why is a smaller CV better? Explain. O A smaller CV is better because it indicates a higher risk per unit of expected return. O A smaller CV is better because it indicates a lower risk per unit of expected returnStep by Step Solution
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