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Scenario Severe recession 0.05 Stock Fund Probability Rate of Return -28% Bond Fund Rate of Return -13% Mild recession 0.25 -8% 19% Normal growth
Scenario Severe recession 0.05 Stock Fund Probability Rate of Return -28% Bond Fund Rate of Return -13% Mild recession 0.25 -8% 19% Normal growth Boom 0.40 13% 12% 0.30 18% -9% Required: 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.) Mean return Variance % b. Calculate the value of the covariance between the stock and bond funds. (Negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.) Covariance
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