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

 

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Consider the following table: Scenario Severe recession Mild recession Normal growth Boom Required: Probability Stock Fund Rate of Return Bond Fund Rate of Return 0.10 -34% -9% 0.20 0.30 0.40 -20.0% 21% 36% 5% 9% 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 4 decimal places.) Mean return Variance 13.3 % 669.4100 %-Squared 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 4 decimal places.) Covariance 0.1813 %-Squared Consider the following table: Scenario Severe recession Mild recession Normal growth Boom Required: Probability Stock Fund Rate of Return Bond Fund Rate of Return 0.10 -34% -9% 0.20 0.30 0.40 -20.0% 21% 36% 5% 9% 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 4 decimal places.) Mean return Variance 13.3 % 669.4100 %-Squared 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 4 decimal places.) Covariance 0.1813 %-Squared

Answer rating: 100% (QA)

a To calculate the mean return and variance for the stock fund we need to use the given probabilitie... View the full answer