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Question: do bonds reduce the overall risk of an investment portfolio...

Question details

Do bonds reduce the overall risk of an investment portfolio? Let x be a random variable representing annual percent return for Vanguard Total Stock Index (all stocks). Let y be a random variable representing annual return for Vanguard Balanced Index (60% stock and 40% bond). For the past several years, we have the following data.

x:

26

0

26

32

23

29

32

−23

−15

−24

y:

9

−10

20

23

23

17

17

−8

−10

−7

a. Use the results of part (a) to compute the sample mean, variance, and standard deviation for x and for y. (Round your answers to two decimal places.)

x-  s2   s

b. Compute a 75% Chebyshev interval around the mean for x values and also for y values. (Round your answers to two decimal places.)

x y
Lower Limit
Upper Limit

c.Compute the coefficient of variation for each fund. (Round your answers to the nearest whole number.)

x y
CV % %
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