Round interim calculations to 6 decimals and final calculations to 4 decimals. You have been provided with the following information for a Stock fund and a Bond fund: Return on State of Economy Recession Probability Stock fund Return on Bond fund Return on Portfolio 20% -5% 14% ? Normal 60% 15% 8% ? Boom 20% 25% 4% ? Calculations Expected return Standard deviation Covariance Correlation Portfolio Stock Fund Bond Fund 60% Stocks; 40% Bonds 13% 8.4% ? 9.8% ? ? ? ? 1. Calculate the standard deviation for the Bond fund. (4 marks) 2. Calculate the expected return for a portfolio consisting of 40% Stock fund and 60% Bond fund. (4 marks) 3. Calculate the covariance and correlation for a portfolio made up of 40% Stock fund and 60% Bond fund. (6 marks) 4. Calculate the standard deviation for a portfolio made up of 40% Stock fund and 60% Bond fund. (4 marks) 5. Explain the results in 1-4 above in terms of what you know about correlation and diversification. (2 marks)