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Consider the following table: Severe recession Mild recession Normal growth Boom Scenario. Mean return Variance Required: a. Calculate the values of mean return and variance for the stock fund. ( Covariance 7.2% 168.16 Stock Fund Probability Rate of Return 0.05 0.25 0.40 0.30 -28% -8% 13% 18% b. Calculate the value of the covariance between the stock and bond funds. ( 11.99 Bond Fund Rate of Return -13% 19% 12% -94

Consider the following table: Severe recession Mild recession Normal growth Boom Scenario. Mean return Variance Required: a. Calculate the values of mean return and variance for the stock fund. ( Covariance 7.2% 168.16 Stock Fund Probability Rate of Return 0.05 0.25 0.40 0.30 -28% -8% 13% 18% b. Calculate the value of the covariance between the stock and bond funds. ( 11.99 Bond Fund Rate of Return -13% 19% 12% -94

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Consider the following table: Severe recession Mild recession Normal growth Boom Scenario. Mean return Variance Required: a. Calculate the values of mean return and variance for the stock fund. ( Covariance 7.2 % 168.16 Stock Fund Probability Rate of Return 0.05 0.25 0.40 0.30 -28% -8% 13% 18% b. Calculate the value of the covariance between the stock and bond funds. ( 11.99 Bond Fund Rate of Return -13% 19% 12% -94
Transcribed Image Text:Consider the following table: Severe recession Mild recession Normal growth Boom Scenario. Mean return Variance Required: a. Calculate the values of mean return and variance for the stock fund. ( Covariance 7.2 % 168.16 Stock Fund Probability Rate of Return 0.05 0.25 0.40 0.30 -28% -8% 13% 18% b. Calculate the value of the covariance between the stock and bond funds. ( 11.99 Bond Fund Rate of Return -13% 19% 12% -94
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