Do bonds reduce the overall risk of an investment portfolio? Let x be a random v

Question

Do bonds reduce the overall risk of an investment portfolio? Let x be a random variable representing annual percent return for the Vanguard Total Stock Index (all Stocks). Let y be a random variable representing annual return for the Vanguard Balanced Index (60% stock and 40% bond). For the past several years, assume the following data. Compute the coefficient of variation for each fund. Round your answers to the nearest tenth. x: 13 0 38 23 35 25 26 -13 -13 -16 y: 7 -2 26 16 24 16 16 -2 -3 -7 a. for x-values: 108.6%, and for y-values: 236.8% b. for x-values: 132.4,% and for y-values: 194.1% c. for x-values: 194.1%, and for y-values: 236.8% d. for x-values: 108.6%, and for y-values: 132.4% e. for x-values: 194.1%, and for y-values: 132.4%

Explanation / Answer

e. for x-values: 194.1%, and for y-values: 132.4% ;

x: y: 13 7 0 -2 38 26 23 16 35 24 25 16 26 16 -13 -2 -13 -3 -16 -7 mean 11.8 9.1 std deviation 20.735 12.050 coeff of variation=(std deviation/mean)% 175.7% 132.4%

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