Question: Can any one help with this question! B webassignnet 7. [-I19 Points] BBBASICS'I'ATB 3.2.0165. Do bonds reduce the overall risk of an investment portfolio? Let
Can any one help with this question!
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B webassignnet 7. [-I19 Points] BBBASICS'I'ATB 3.2.0165. Do bonds reduce the overall risk of an investment portfolio? Let x be a random variable representing annual percent return for Vanguard Total Stock Index (all stocks). Let y be 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: 32 O 21 25 16 19 32 14 -19 17 y: 20 V5 21 28 28 13 12 ~B v8 7? l USE SALT (a) Compute 2.x, 21x2, 2y, Zyz. 2* [:1 w :1 2r :1 iv! :1 (b) Use the results of part (a) to compute the sample mean, variance, and standard deviation for x and for y. (Round your answers to four decimal places.) (c) Compute a 75% Chebyshev interval around the mean for x values and also for y values. (Round your answers to two decimal places.) mm...\" S S :1 :1 Upper Limit Use the intervals to compare the two funds. 0 75% of the returns for the balanced fund fall within a narrower range than those of the stock fund. 0 75% of the returns for the stock fund fall within a narrower range than those of the balanced fund. 0 25% of the returns for the balanced fund fall within a narrower range than those of the stock fund. 0 25% of the returns for the stock fund fall within a wider range than those of the balanced fund. (d) Compute the coefcient of variation for each fund. (Round your answers to the nearest whole number.) cvf:l*l:i* Use the coefficients of variation to compare the two funds. 0 For each unit of return, the stock fund has lower risk. 0 For each unit of return, the balanced fund has lower risk. 0 For each unit of return, the funds have equal risk. If 5 represents risks and E represents expected return, then 5/; can be thought of as a measure of risk per unit of expected return. In this case, why is a smaller CV better? Explain. O A smaller CV is better because it indicates a higher risk per unit of expected return. 0 A smaller CV is better because it indicates a lower risk per unit of expected return. Need Help? i
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