Question

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

Consider the following table:

   

Stock Fund Bond Fund
Scenario Probability Rate of Return Rate of Return
  Severe recession 0.05        −44%        −13%         
  Mild recession 0.25        −16%        11%         
  Normal growth 0.40        10%        4%         
  Boom 0.30        30%        3%         

   

b.

Calculate the values of expected return and variance for the stock fund. (Do not round intermediate calculations. Enter "Expected return" value as a percentage rounded to 1 decimal place and "Variance" as decimal number rounded to 4 decimal places.)

       

Expected return % 6.8
  Variance   


c.

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. Enter your answer as a decimal number rounded to 4 decimal places.)


  Covariance   

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