Spreadsheet 6.1 Capital market expectations for stock and bond funds \begin{tabular}{|l|c|c|c|c|c|} \hline & & Stock Fund & & Bond Fund & \\ \hline Scenario & Probability & Rate of Returr & Col B Col C & Rate of Returr & Col B Col \\ \hline Severe recession & 0.05 & 15 & & 5 & 0.3 \\ \hline Mild recession & 0.35 & 5 & & 5 & 1.8 \\ \hline Normal growth & 0.50 & 10 & & 8 & 4 \\ \hline Boom & 0.10 & 35 & & 1 & 0.1 \\ \hline Expected or Mear & Return: & & & & 5.6 \\ \hline \end{tabular} Spreadsheet 6.2 Variance of returns 6 5.6 Spreadsheet 6.3 Performance of a portfolio invested in the stock and bond funds Spreadsheet 6.4 Covariance between the returns of the stock and bond funds \begin{tabular}{|l|c|c|c|c|c|} \hline & \multicolumn{2}{|c|}{ Devi tion from Mean R } & Covariance & \\ \hline Scenario & Probability & Stock Fund & Bond Fund & Product of Dev & Col B X Col E \\ \hline Severe recession & 0.05 & & & & \\ \hline Mild recession & 0.35 & & & & \\ \hline Normal growth & 0.50 & & & & \\ \hline Boom & 0.10 & & & Covariance = & SUM: \\ \hline & & & & \\ \hline Correlation coefficient = Covariance/(S)dDev(stocks)*StdPev(bonds)) = & & \\ \hline \end{tabular}