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Consider the performance of a stock fund and a bond fund, based on the state of the economy.                   State of Economy Probability Stock Fund: Rate of Return Bond Fund: Rate of Return   Boom 0.2500 0.4500 0.0500   Normal Growth 0.4500 0.1300 0.0700   Recession 0.2750 -0.1500 0.0750   Severe Recession 0.0250 -0.4000 -0.0500             Measurement Stock Fund Bond Fund     Mean 11.98% 6.34%     Variance 0.0541 0.0004     Standard Deviation 23.25% 2.06%     Covariance (Stock and Bond Funds) -0.05%       Correlation -9.68%                 Required:         Using the information in the table above and the weights below, calculate the mean, variance, and standard deviation of a combined portfolio.                   Stock Fund 70%       Bond Fund 30%                 (Use cells A5 to D21 from the given information to complete this question.)                   Portfolio Performance       Mean         Variance         Standard Deviation

Consider the performance of a stock fund and a bond fund, based on the state of the economy.                   State of Economy Probability Stock Fund: Rate of Return Bond Fund: Rate of Return   Boom 0.2500 0.4500 0.0500   Normal Growth 0.4500 0.1300 0.0700   Recession 0.2750 -0.1500 0.0750   Severe Recession 0.0250 -0.4000 -0.0500             Measurement Stock Fund Bond Fund     Mean 11.98% 6.34%     Variance 0.0541 0.0004     Standard Deviation 23.25% 2.06%     Covariance (Stock and Bond Funds) -0.05%       Correlation -9.68%                 Required:         Using the information in the table above and the weights below, calculate the mean, variance, and standard deviation of a combined portfolio.                   Stock Fund 70%       Bond Fund 30%                 (Use cells A5 to D21 from the given information to complete this question.)                   Portfolio Performance       Mean         Variance         Standard Deviation

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 performance of a stock fund and a bond fund, based on the state of the economy.        
         
State of Economy Probability Stock Fund: Rate of Return Bond Fund: Rate of Return  
Boom 0.2500 0.4500 0.0500  
Normal Growth 0.4500 0.1300 0.0700  
Recession 0.2750 -0.1500 0.0750  
Severe Recession 0.0250 -0.4000 -0.0500  
         
Measurement Stock Fund Bond Fund    
Mean 11.98% 6.34%    
Variance 0.0541 0.0004    
Standard Deviation 23.25% 2.06%    
Covariance (Stock and Bond Funds) -0.05%      
Correlation -9.68%      
         
Required:        
Using the information in the table above and the weights below, calculate the mean, variance, and standard deviation of a combined portfolio.        
         
Stock Fund 70%      
Bond Fund 30%      
         
(Use cells A5 to D21 from the given information to complete this question.)        
         
Portfolio Performance      
Mean        
Variance        
Standard Deviation        
         
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