Consider the following table: Stock Fund Bond Fund Scenario Probability Rate of Return Rate of Return Severe
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Question:
Consider the following table:
Stock Fund Bond Fund
Scenario Probability Rate of Return Rate of Return
Severe recession 0.05 -25 % -10 %
Mild recession 0.25 -5 % 16 %
Normal growth 0.40 10 % 9 %
Boom 0.30 15 % -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:
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