Question

Do bonds reduce the overall risk of an investment portfolio? Let x be a random variable...

Do bonds reduce the overall risk of an investment portfolio? Let x be a random variable representing annual percent return for Vanguard Total Stock Index (all stocks). Let y be a random variable representing annual return for Vanguard Balanced Index (60% stock and 40% bond). For the past several years, we have the following data.

x:

38

0

21

24

19

16

36

−22

−24

−8

y:

10

−2

27

25

16

15

15

−10

−7

−5

(a) Compute Σx, Σx2, Σy, Σy2.

Σx 1 Σx2 2
Σy 3 Σy2 4


(b) Use the results of part (a) to compute the sample mean, variance, and standard deviation for x and for y. (Round your answers to two decimal places.)

x y
x 5 6
s2 7 8
s 9 10


(c) Compute a 75% Chebyshev interval around the mean for x values and also for y values. (Round your answers to two decimal places.)

x y
Lower Limit 11 12
Upper Limit 13 14


Use the intervals to compare the two funds.

75% of the returns for the balanced fund fall within a narrower range than those of the stock fund. 75% of the returns for the stock fund fall within a narrower range than those of the balanced fund.     25% of the returns for the balanced fund fall within a narrower range than those of the stock fund. 25% of the returns for the stock fund fall within a wider range than those of the balanced fund.


(d) Compute the coefficient of variation for each fund. (Round your answers to the nearest whole number.)

x y
CV 16 % 17 %


Use the coefficients of variation to compare the two funds.

For each unit of return, the stock fund has lower risk. For each unit of return, the balanced fund has lower risk.     For each unit of return, the funds have equal risk.

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Do bonds reduce the overall risk of an investment portfolio? Let x be a random variable...
Do bonds reduce the overall risk of an investment portfolio? Let x be a random variable representing annual percent return for Vanguard Total Stock Index (all stocks). Let y be a random variable representing annual return for Vanguard Balanced Index (60% stock and 40% bond). For the past several years, we have the following data. x: 20 0 28 34 18 35 14 −21 −18 −16 y: 22 −3 25 23 14 8 16 −8 −11 −8 (a) Compute Σx,...
Do bonds reduce the overall risk of an investment portfolio? Let x be a random variable...
Do bonds reduce the overall risk of an investment portfolio? Let x be a random variable representing annual percent return for Vanguard Total Stock Index (all stocks). Let y be a random variable representing annual return for Vanguard Balanced Index (60% stock and 40% bond). For the past several years, we have the following data. x: 22 0 12 14 31 37 16 −22 −11 −18 y: 12 −4 21 20 12 19 9 −3 −11 −8 (a) Compute Σx,...
Do bonds reduce the overall risk of an investment portfolio? Let x be a random variable...
Do bonds reduce the overall risk of an investment portfolio? Let x be a random variable representing annual percent return for Vanguard Total Stock Index (all stocks). Let y be a random variable representing annual return for Vanguard Balanced Index (60% stock and 40% bond). For the past several years, we have the following data. x: 23 0 37 35 16 22 14 −20 −11 −15 y: 21 −10 17 21 16 18 17 −3 −9 −4 (a) Compute Σx,...
Do bonds reduce the overall risk of an investment portfolio? Let x be a random variable...
Do bonds reduce the overall risk of an investment portfolio? Let x be a random variable representing annual percent return for Vanguard Total Stock Index (all stocks). Let y be a random variable representing annual return for Vanguard Balanced Index (60% stock and 40% bond). For the past several years, we have the following data. x: 32 0 36 21 38 12 33 −24 −22 −24 y: 26 −10 18 13 9 26 18 −4 −4 −9 (a) Compute Σx,...
Do bonds reduce the overall risk of an investment portfolio? Let x be a random variable...
Do bonds reduce the overall risk of an investment portfolio? Let x be a random variable representing annual percent return for the Vanguard Total Stock Index (all Stocks). Let y be a random variable representing annual return for the Vanguard Balanced Index (60% stock and 40% bond). For the past several years, assume the following data. Compute. x: 15 0 38 25 31 27 28 15 15 25 y: 8 2 29 18 26 16 18 2 3 8
Do bonds reduce the overall risk of an investment portfolio? Let x be a random variable...
Do bonds reduce the overall risk of an investment portfolio? Let x be a random variable representing annual percent return for the Vanguard Total Stock Index (all Stocks). Let y be a random variable representing annual return for the Vanguard Balanced Index (60% stock and 40% bond). For the past several years, assume the following data. Compute the coefficient of variation for each fund. Round your answers to the nearest tenth. x: 15 0 37 22 35 24 25 -15...
Do bonds reduce the overall risk of an investment portfolio? Let x be a random variable...
Do bonds reduce the overall risk of an investment portfolio? Let x be a random variable representing annual percent return for the Vanguard Total Stock Index (all Stocks). Let y be a random variable representing annual return for the Vanguard Balanced Index (60% stock and 40% bond). For the past several years, assume the following data. 15 0 38 21 31 23 24 -15 -15 -21 6 -4 28 18 22 17 18 -4 -5 -6 ​ The sample means...
Pax World Balanced is a highly respected, socially responsible mutual fund of stocks and bonds. Vanguard...
Pax World Balanced is a highly respected, socially responsible mutual fund of stocks and bonds. Vanguard Balanced Index is another highly regarded fund that represents the entire U.S. stock and bond market (an index fund). The mean and standard deviation of annualized percent returns are shown below. The annualized mean and standard deviation are for a recent 10-years period. †. Pax World Balanced: x = 9.55%; s = 13.83% Vanguard Balanced Index: x = 8.79%; s = 12.32% (a) Compute...
Pax World Balanced is a highly respected, socially responsible mutual fund of stocks and bonds. Vanguard...
Pax World Balanced is a highly respected, socially responsible mutual fund of stocks and bonds. Vanguard Balanced Index is another highly regarded fund that represents the entire U.S. stock and bond market (an index fund). The mean and standard deviation of annualized percent returns are shown below. The annualized mean and standard deviation are for a recent 10-years period.†. Pax World Balanced: x = 9.58%; s = 14.19% Vanguard Balanced Index: x = 9.06%; s = 12.53% (a) Compute the...
Let x be the average number of employees in a group health insurance plan, and let...
Let x be the average number of employees in a group health insurance plan, and let y be the average administrative cost as a percentage of claims. x 3 7 15 34 74 y 40 35 30 28 16 Use a calculator to verify that Σx = 133, Σx2 = 6915, Σy = 149, Σy2 = 4765, and Σxy = 2951. Compute r. (Round your answer to three decimal places.)
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT