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Problem 6-7 Consider the following table Probability 0.10 0.20 0.30 0.40 Stock Fund Rate of Return -46% -24% Bond Fund Rate of Return -20% 14%
Problem 6-7 Consider the following table Probability 0.10 0.20 0.30 0.40 Stock Fund Rate of Return -46% -24% Bond Fund Rate of Return -20% 14% 5% 5% Scenario Severe recession Mild recession Normal growth Boom 8% 44% 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.) Mean return Variance %-Squared 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.) Covariance %-Squared
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