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Consider the performance of a stock fund and a bond fund, based on the state of the economy. | |||
State of Economy | Probability | Stock Fund: Rate of Return | Bond Fund: Rate of Return |
Boom | 0.2500 | 0.4500 | 0.0500 |
Normal Growth | 0.4500 | 0.1300 | 0.0700 |
Recession | 0.2750 | -0.1500 | 0.0750 |
Severe Recession | 0.0250 | -0.4000 | -0.0500 |
Required: | |||
Using the information in the table above, first calculate the mean, variance, and standard deviation of the stock and bond funds. Then discover the covariance and correlation between these two funds. | |||
(Use cells A5 to D8 from the given information ) | |||
Measurement | Stock Fund | Bond Fund | |
Mean | 11.98% | 6.34% | |
Variance | 0.0000 | 0.0000 | |
Standard Deviation | |||
Covariance (Stock and Bond Funds) | Correlation | ||
Can answer it with explain with the equation. i Answered the Mean and the varience
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