Problem:

Consider the following table:

		Stock Fund	Bond Fund
Scenario	Probability	Rate of Return	Rate of Return
Severe recession	.10	38%	8%
Mild recession	.20	14%	5%
Normal growth	.40	16%	6%
Boom	.30	25%	4%
a.Compute the expected return and standard deviation of the Stock Fund & Calculate the values of expected return and variance for the bond fund. b.Calculate the value of the covariance and coefficient of the correlation coefficient between the stock and bond funds. c. Compute the expected return and risk of the minimum variance portfolio & Compute the expected return and risk of the optimal portfolio d. If you will invest 30 % in the risk free and the rest in the optimal portfolio. Compute the expected return and risk of the complete portfolio & Compute the slope of the CAL