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What is the expected return for the stock fund

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Reference no: EM133174490

Question - Consider two risky assets: a stock fund and a bond fund with the following probability distributions.

Scenario

Probability

Stock Return (%)

Bond return (%)

Recession

0.20

-40

9

Normal growth

0.50

17

8

Boom

0.30

33

-5

a. What is the expected return for the stock fund?

b. What is the standard deviation of the Bond fund?

c. What is the correlation coefficient between the stock returns and the bond returns?

Reference no: EM133174490

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