Question 17 (3 points) 0.2 Stock Fund Bond Fund Scenario Prob. Return Return Recession -10% -7% Normal growth 0.5 8% 8% Boom 0.3 20% 4% The expected returns are and for stock fund and bond fund, respectively. 1+R 1+i Arithmetic average = Geometric average=[(1 + r)(1 + r) ... (1 + r)]*-1 1+r = E(1) - E-p(s)r(s) Variance(r) = E-p(s)[(r(s) E(r)] of = Bfon + o*(@:) Coverore 2(Tp)-ry Cov(ri. 1) = -1p(s)[r(s) E(r)][n(s) E(n)] Pij Sharpe ratio S = 00 Op OA) 8%; 3.8% B) 6%; -4.6% 8%; -4.6% Screenshot D) 11.6%; 3.8%