QUESTION 37

1. 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%