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scenario prob. stock fund rate of return % bond fund rate of return % severe recession .05 -29 -14 mild recession .25 -9 20 normal
scenario | prob. | stock fund rate of return % | bond fund rate of return % | |
severe recession | .05 | -29 | -14 | |
mild recession | .25 | -9 | 20 | |
normal growth | .4 | 14 | 13 | |
boom | .3 | 19 | -10 |
Consider the following table: Stock Fund Bond Fund Scenario Probability Rate of Return Rate of Return Severe recession 0.05 29 % 14 % Mild recession 0.25 9 % 20 % Normal growth 0.40 14 % 13 % Boom 0.30 19 % 10 %
a.Calculate the values of mean return and variance for the stock fund. (Do not round intermediate calculations. Round "Mean return" value to 1 decimal place and "Variance" to 2 decimal places.)
b.Calculate the value of the covariance between the stock and bond funds.
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