Consider the performance of a stock fund and a bond fund, based on the state of the economy. State of EconomyProbabilityStock Fund: Rate of ReturnBond Fund: Rate of ReturnBoom0.25000.45000.0500Normal Growth0.45000.13000.0700Recession0.2750-0.15000.0750Severe Recession0.0250-0.4000-0.0500 Required: Using the information in the table above, first calculate the mean, variance, and standard deviation of the stock and bond funds. Then discover the covariance and correlation between these two funds.

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Answered: Consider the performance of a stock…

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

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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

Required:
Using the information in the table above, first calculate the mean, variance, and standard deviation of the stock and bond funds. Then discover the covariance and correlation between these two funds.