Problem: Consider the following table: Stock Fund Rate of Bond Fund Scenario Probability Rate of Return Return Severe recession Mild 10 -38% -8% 20 -14% 5% recession Normal .40 16% 6% growth Boom 30 25% 4% a Compute the expected return and standard deviation of the Stock Fund? b.Calculate the values of expected return and variance for the bond fund. c. Calculate the value of the covariance and coefficient of correlation coefficient between the stock and bond funds. d. Compute the expected return and risk of the minimum variance portfolio. e. Draw the IOS and label the minimum variance portfolio. f. Show graphically the optimal portfolio. g. Compute the expected return and risk of the optimal portfolio h. 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. i, Compute the slope of the CAL.

Problem: Consider the following table: Bond Fund Rate of Return -8% Stock Fund Scenario Probability Rate of Return Severe 10 -38% recession Mild 20 -14% recession Normal 40 16% growth Boom 30 25% 5% 6% -4% a. Compute the expected return and standard deviation of the Stock Fund? b. Calculate the values of expected return and variance for the bond fund c. Calculate the value of the covariance and coefficient of correlation coefficient between the stock and bond funds. d. Compute the expected return and risk of the minimum variance portfolio e. Draw the IOS and label the minimum variance portfolio. f. Show graphically the optimal portfolio g. Compute the expected return and risk of the optimal portfolio h. 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 i, Compute the slope of the CAL