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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...

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Finance

Consider the following table:

Stock FundBond Fund
ScenarioProbabilityRate of ReturnRate of Return
Severe recession0.10–37%–9%
Mild recession0.20–11%15%
Normal growth0.3514%8%
Boom0.3530%–5%


a. Calculate the values of mean return andvariance for the stock fund. (Do not round intermediatecalculations. Round "Mean return" value to 1 decimal place and"Variance" to 4 decimal places.)

Mean return9.5 correct%
Variance0.0454 incorrect%-Squar

b. Calculate the value of the covariancebetween the stock and bond funds. (Negative value should beindicated 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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Transcribed Image Text

Consider the following table:Stock FundBond FundScenarioProbabilityRate of ReturnRate of ReturnSevere recession0.10–37%–9%Mild recession0.20–11%15%Normal growth0.3514%8%Boom0.3530%–5%a. Calculate the values of mean return andvariance for the stock fund. (Do not round intermediatecalculations. Round "Mean return" value to 1 decimal place and"Variance" to 4 decimal places.)Mean return9.5 correct%Variance0.0454 incorrect%-Squarb. Calculate the value of the covariancebetween the stock and bond funds. (Negative value should beindicated 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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