Problem 6-7 (Algo)

Consider the following table:

Scenario	Probability	Stock Fund Rate of Return	Bond Fund Rate of Return
Severe recession	0.10	42%	15%
Mild recession	0.15	18.0%	7%
Normal growth	0.35	20%	9%
Boom	0.40	27%	6%

Required:

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 4 decimal places.)

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 4 decimal places.)