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In: Finance

Consider the following table: Scenario Probability Stock Fund-Rate of Return Bond Fund-Rate of return Severe recession...

Consider the following table:

Scenario Probability Stock Fund-Rate of Return Bond Fund-Rate of return
Severe recession 0.15 -34% -10%
Mild Recession 0.25 -18.5% 6%
Normal Growth 0.25 14% 7%
Boom 0.35 45% -3%

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 4 decimal places.)

Mean return ________%
Variance __________%-Squared

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 4 decimal places.)

Covariance __________ %-Squared

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Expert Solution

jeff jeffy answered 1 year ago
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