Questions 37 to 42

QUESTION 37 For the next 4 questions suppose the following holds: Consider the following probability distribution for Stock Fund (3) and Bond Fund (B). Probability Return on Bond Fund Return on Stock Fund 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? 0 7.6% O 8.0% O 8.4% O 9.2% O 9.6% QUESTION 38 Continuation of the previous problem: Consider the following probability distribution for Stock Fund (5) and Bond Fund (B). m What is the standard deviation of Bond Fund? 0 7.67% O 8.40% O 9.33% O 10.25% 0 12.34% QUESTION 39 Continuation of the previous problem: Consider the following probability distribution for Stock Fund (8) and Bond Fund (B). - What is the covariance between the Stock Fund and the Bond Fund? 0 -120 (-0.012) O 112 (0.0112) 0 100 (0.01) O 98 (0.0098) 0 75 {0.0075) QUESTION 40 Continuation of the previous problems: Consider the following probability distribution for Stock Fund (8) and Bond Fund (B). What is the correlation coefficient between the Stock Fund and the Bond Fund? 0 -0.52 O 0.48 O 0.39 O -0.18 O 0.23 QUESTION 41 Continuation of the previous problem: Consider the following probability distribution for Stock Fund (S) and Bond Fund (B). What is the expected return on a portfolio which is 40% invested in the stock fund and the rest in the bond fund? 0 10.2% 0 10.4% 0 11.2% 0 11.6% o 12.2% QUESTION 42 Continuation of the previous problem: Consider the following probability distribution for Stock Fund (8) and Bond Fund (B). What is the standard deviation of the return on the above portfolio (40% in stock and 60% in bond)? 0 6.2% O 7.5% O 8.7% O 9.4% O 10.5%