Question: (a) Computex,x 2 ,y,y 2 . x x 2 y y 2 Do bonds reduce the overall risk of an investment portfolio? Letxbe a random
(a) Computex,x2,y,y2.
| x | x2 | |
| y | y2 |
|
Do bonds reduce the overall risk of an investment portfolio? Letxbe a random variable representing annual percent return for Vanguard Total Stock Index (all stocks). Letybe a random variable representing annual return for Vanguard Balanced Index (60% stock and 40% bond). For the past several years, we have the following data.
| x: | 37 | 0 | 31 | 15 | 22 | 18 | 31 | 11 | 20 | 18 |
| y: | 28 | 8 | 28 | 23 | 22 | 25 | 11 | 8 | 3 | 2 |
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