Consider the following table

Stock Fund Bond Fund

Scenario Probability Rate of Return Rate of Return

Severe recession .07 – 37% –9

Mild recession .26 –8% 19

Normal growth .35 19% 10

Boom .32 29% –5

Required:

(a)

Calculate the values of mean return and variance for the stock fund. (Round your answers to 2 decimal places.)

Mean return

Variance

(b)

Calculate the value of the covariance between the stock and bond funds. (Round your answer to 2 decimal places. Negative amount should be indicated by a minus sign.)

Covariance

Stock Fund Bond Fund

Scenario Probability Rate of Return Rate of Return

Severe recession .07 – 37% –9

Mild recession .26 –8% 19

Normal growth .35 19% 10

Boom .32 29% –5

Required:

(a)

Calculate the values of mean return and variance for the stock fund. (Round your answers to 2 decimal places.)

Mean return

Variance

(b)

Calculate the value of the covariance between the stock and bond funds. (Round your answer to 2 decimal places. Negative amount should be indicated by a minus sign.)

Covariance

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