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Stock Fund Bond Fund Scenario Probability Rate of Return Rate of Return   Severe recession 0.05    ...

Stock Fund Bond Fund
Scenario Probability Rate of Return Rate of Return
  Severe recession 0.05        −38%        −14%         
  Mild recession 0.25        −6%        10%         
  Normal growth 0.45        16%        4%         
  Boom 0.25        40%        4%         

   

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 %
  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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Expert Solution

jeff jeffy answered 1 year ago
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