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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