Problem 6-7 (Algo)

Consider the following table:

Scenario	Probability	Stock Fund Rate of Return	Bond Fund Rate of Return
Severe recession	0.20	38%	12%
Mild recession	0.20	26.0%	7%
Normal growth	0.35	8%	3%
Boom	0.25	46%	7%

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.)