Consider the following table: Scenario Severe recession Mild recession Normal growth Boom Required: Stock Fund Probability...

Transcribed Image Text:

Consider the following table: Scenario Severe recession Mild recession Normal growth Boom Required: Stock Fund Probability Rate of Return 0.10 -43% Bond Fund Rate of Return -10% 0.20 -23% 16% 0.40 28% 9% 0.30 33% -6% a. Calculate the values of mean return and variance for the stock fund. (Do not round intermediate calculations. Round "Mean return" value to 1 decimal place and "Variance" to 2 decimal places.) Mean return Variance % b. Calculate the value of the covariance between the stock and bond funds. (Negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.) Covariance Consider the following table: Scenario Severe recession Mild recession Normal growth Boom Required: Stock Fund Probability Rate of Return 0.10 -43% Bond Fund Rate of Return -10% 0.20 -23% 16% 0.40 28% 9% 0.30 33% -6% a. Calculate the values of mean return and variance for the stock fund. (Do not round intermediate calculations. Round "Mean return" value to 1 decimal place and "Variance" to 2 decimal places.) Mean return Variance % b. Calculate the value of the covariance between the stock and bond funds. (Negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.) Covariance