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Homework answers / question archive / Consider the following table: Stock Fund Bond Fund Scenario Probability Rate of Rate of Return Return Severe 0
Consider the following table:
Stock Fund Bond Fund Scenario Probability Rate of Rate of Return Return
Severe 0.05 —43% —12% recession Mild recession 0.25 —17% 12% Normal growth 0.40 14% 9% Boom 0.30 31% 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.)
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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