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 |
|