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Do bonds reduce the overall risk of an investment portfolio? Let x be a random variable representing annual percent return for Vanguard Total Stock
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 10 0 35 23 29 22 23 -13 -12 -22 y 9 -2 31 15 21 17 15 -2 -3 -12 (a) Compute Ex. Ex 95 Compute x. 4505 Compute y. 2y = 89 Compute y2. = 2383 USE SALT (b) Use the results of part (a) to compute the sample mean, variance, and standard deviation for x. (Round your answers to four decimal places.) x = 9.5 $2 = 360.2500 X s=18.9802 Use the results of part (a) to compute the sample mean, variance, and standard deviation for y. (Round your answers to four decimal places.) y = 8.9 = 159.09 S= 12.6131 (c) Compute a 75% Chebyshev interval around the mean for x values. (Enter your answer in the form: lower limit to upper limit. Include the word "to." Round your numerical values to two decimal places.) K x= 1-(0)2 Your answer(s) should be in the form of expression(s). Compute a 75% Chebyshev interval around the mean for y values. (Enter your answer in the form: lower limit to upper limit. Include the word "to." Round your numerical values to two decimal places.) K 1-(100)2 Your answer(s) should be in the form of expression(s). Use the intervals to compare the two funds. 75% of the returns for the balanced fund fall within a narrower range than those of the stock fund. 75% of the returns for the stock fund fall within a narrower range than those of the balanced fund. 25% of the returns for the balanced fund fall within a narrower range than those of the stock fund. 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 (in percent) for fund x. (Round your answer to the nearest whole number.) % Compute the coefficient of variation (in percent) for fund y. (Round your answer to the nearest whole number.) % Use the coefficients of variation to compare the two funds.
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