QUESTION 37 For the next 4 questions suppose the following holds: Consider the following probability distribution for Stock Fund (S) and Bond Fund (B). State Probability Return on Bond Fund Return on Stock Fund 1 .2 -8% 20% 2 .4 8% 40% 3 .4 15% -15% The expected return and the standard deviation of the Stock Fund are 14% and 24.78%, respectively. What is the expected return of Bond Fund? 7.6% 8.0% 8.4% 9.2% 9.6% QUESTION 38 Continuation of the previous problem: Consider the following probability distribution for Stock Fund (S) and Bond Fund (B). State Probability Return on Bond Fund Return on Stock Fund 1 .2 -8% 20% 2 4 8% 40% 3 4 15% -15% What is the standard deviation of Bond Fund? 7.67% 8.40% 9.33% 10.25% O 12.34% QUESTION 39 Continuation of the previous problem: Consider the following probability distribution for Stock Fund (S) and Bond Fund (B). State Probability Return on Bond Fund Return on Stock Fund 1 .2 -8% 20% 2 .4 8% 40% 3 .4 15% -15% What is the covariance between the Stock Fund and the Bond Fund? -120 (-0.012) -112 (0.0112) -100 (0.01) -98 (0.0098) -75 (-0.0075) QUESTION 40 Continuation of the previous problems: Consider the following probability distribution for Stock Fund (S) and Bond Fund (B). State Probability Return on Bond Fund Return on Stock Fund 1 .2 -8% 20% 2 .4 8% 40% 3 .4 15% -15% What is the correlation coefficient between the Stock Fund and the Bond Fund? -0.52 -0.48 -0.39 -0.18 0.23 QUESTION 41 Continuation of the previous problem: Consider the following probability distribution for Stock Fund (S) and Bond Fund (B). State Probability Return on Bond Fund Return on Stock Fund 1 .2 -8% 20% 2 .4 8% 40% 3 .4 15% -15% What is the expected return on a portfolio which is 40% invested in the stock fund and the rest in the bond fund? 10.2% 10.4% 11.2% 11.6% 12.2% QUESTION 42 Continuation of the previous problem: Consider the following probability distribution for Stock Fund (S) and Bond Fund (B). State Probability Return on Bond Fund Return on Stock Fund 1 2 -8% 20% 2 .4 8% 40% 3 .4 15% -15% What is the standard deviation of the return on the above portf (40% in stock and 60% in bond)? 6.2% 7.5% 8.7% 9.4% 10.5%