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In: Finance

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

Consider the following table:

Scenario Probability Stock Fund Rate of Return Bond Fund Rate of Return
Severe Recession 0.10 -43% -10%
Mild Recession 0.20 -23% 16%
Normal growth 0.40 28% 9%
Boom 0.30 33% -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.)

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.)

Solutions

Expert Solution

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -

Please note : all answer are provided in % format. if required you may change the format to decimal.

jeff jeffy answered 11 months ago
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