Question

Consider the following table:

   

		Stock Fund	Bond Fund
Scenario	Probability	Rate of Return	Rate of Return
Severe recession	0.10	−37%	−10%
Mild recession	0.20	−17%	16%
Normal growth	0.40	22%	9%
Boom	0.30	27%	−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 ???		%-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 2 decimal places.)

Covariance ??? %-Squared

Answer 1