Question
Information is applicable to questions 3-5 You have been provided with the below information related to potential returns on bonds and shares under different economic
Information is applicable to questions 3-5 You have been provided with the below information related to potential returns on bonds and shares under different economic conditions. Scenario Probability Return.on.Shares Return.on.Bonds Boom 8% 47% 15% Positive Growth 14% 44% 7% Normal Growth 35% 6% 5% Negative Growth 30% 2% 2% Recession 5% -8% -1% Crash 8% -17% -6% Question 3 Calculate the covariance between shares and bonds. A) 0.0076 B) 0.0086 C) 0.0067 D) 0.0068 E) 0.0076 Question 4 Calculate the expected return of a portfolio assuming an equal weight in shares and bonds. A) 7.43% B) 5.91% C) 6.58% D) 8.25% E) 7.58% 3 Question 5 Calculate the variance of a portfolio assuming an equal weight in shares and bonds. A) 0.0136 B) 0.0137 C) 0.0145 D) 0.0124 E) 0.0112
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