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In: Finance

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

Consider the following table:

Stock Fund Bond Fund
Scenario Probability Rate of Return Rate of Return
Severe recession 0.10 –37 % –9 %
Mild recession 0.20 –11 % 15 %
Normal growth 0.35 14 % 8 %
Boom 0.35 30 % –5 %


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 9.5 correct %
Variance 0.0454 incorrect %-Squar

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 (0.0043) incorrect %-Squared

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