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Problem 6-6 (Algo) Consider the following table: Scenario Severe recession Mild recession Normal growth Boom Required: Probability 0.10 Stock Fund Rate of Return -34%
Problem 6-6 (Algo) Consider the following table: Scenario Severe recession Mild recession Normal growth Boom Required: Probability 0.10 Stock Fund Rate of Return -34% Bond Fund Rate of Return -13% 0.20 -14% 19% 0.40 19% 12% 0.30 24% -9% 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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