Question
Please see the attachment and solve the problem. Consider the following table: Stock Fund Bond Fund Scenario Probability Rate of Return Rate of Return Severe
Please see the attachment and solve the problem.
Consider the following table:
Stock Fund Bond Fund
Scenario Probability Rate of Return Rate of Return
Severe recession 0.10 ?43% ?10%
Mild recession 0.20 ?23% 16%
Normal growth 0.40 28% 9%
Boom 0.30 33% ?6%
Stock FundBond FundScenarioProbabilityRate of ReturnRate of ReturnSevere recession0.10?43%?10%Mild recession0.20?23%16%Normal growth0.4028%9%Boom0.3033%?6%
b.Calculate the values of mean return and variance for the stock fund. (Do not round intermediate calculations. Round "Mean return" value to 2 decimal place and "Variance" to 2 decimal places.)
Mean return %Variance
c.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
Stock Fund Bond Fund
Scenario Probability Rate of Return Rate of Return
Severe recession 0.10 ?43% ?10%
Mild recession 0.20 ?23% 16%
Normal growth 0.40 28% 9%
Boom 0.30 33% ?6%
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