Question

Consider the following table: Stock Fund Bond Fund Scenario Probability Rate of Return Rate of Return...

Consider the following table:

Stock Fund Bond Fund
Scenario Probability Rate of Return Rate of Return
Severe recession 0.05 –40 % –9 %
Mild recession 0.25 –14 % 15 %
Normal growth 0.40 17 % 8 %
Boom 0.30 33 % –5 %

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 %-Squared

  

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