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You plan to invest $1,000 in a corporate bond fund or in a common stock fund. The information to the right about the annual
You plan to invest $1,000 in a corporate bond fund or in a common stock fund. The information to the right about the annual return (per $1,000) of each of these investments under different economic conditions is available, along with the probability that each of these economic conditions will occur. Complete parts (a) through (d) below. a. Compute the expected return for the corporate bond fund and for the common stock fund. The expected return for the corporate bond fund is 59.10 . (Round to two decimal places as needed.) The expected return for the common stock fund is 65.51. (Round to two decimal places as needed.) b. Compute the standard deviation for the corporate bond fund and for the common stock fund. The standard deviation for the corporate bond fund is (Round to two decimal places as needed.) Economic Corporate Common Probability Condition Bond Fund Stock Fund 0.01 Extreme recession - 250 - 999 0.09 Recession -60 - 300 0.20 Stagnation 30 - 150 0.30 Slow growth 80 150 0.35 Moderate growth 90 200 0.05 High growth 110 350
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