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Consider the following table: Scenario Probability Stock Fund Rate of Return Bond Fund Rate of Return Severe Recession 0.10 -43% -10% Mild Recession 0.20 -23% 16% Normal growth 0.40 28% 9% Boom 0.30 33% -6% a....

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Finance

Consider the following table:

ScenarioProbabilityStock Fund Rate of ReturnBond Fund Rate of Return
Severe Recession0.10-43%-10%
Mild Recession0.20-23%16%
Normal growth0.4028%9%
Boom0.3033%-6%

a. Calculate the values of mean return and variance for thestock fund. (Do not round intermediate calculations. Round "Meanreturn" value to 1 decimal place and "Variance" to 2 decimalplaces.)

b. Calculate the value of the covariance between the stock andbond funds (Negative value should be indicated by a minus sign. Donot round intermediate calculations. Round your answer to 2 decimalplaces.)

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Transcribed Image Text

Consider the following table:ScenarioProbabilityStock Fund Rate of ReturnBond Fund Rate of ReturnSevere Recession0.10-43%-10%Mild Recession0.20-23%16%Normal growth0.4028%9%Boom0.3033%-6%a. Calculate the values of mean return and variance for thestock fund. (Do not round intermediate calculations. Round "Meanreturn" value to 1 decimal place and "Variance" to 2 decimalplaces.)b. Calculate the value of the covariance between the stock andbond funds (Negative value should be indicated by a minus sign. Donot round intermediate calculations. Round your answer to 2 decimalplaces.)

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