Do Bonds Reduce the Overall Risk of an Investment Portfolio

question 9

Multiple Choice

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 a 75% Chebyshev interval around the mean for x-values and also for y-values. Round your answers to the nearest hundredth. $$\begin{array} { l l l l l l l l l l l } x : & 12 & 0 & 39 & 24 & 33 & 26 & 27 & - 12 & - 12 & - 24 \\y & 8 & - 5 & 28 & 15 & 25 & 18 & 15 & - 5 & - 6 & - 8\end{array}$$

• A)for x-values: -10.29 to 54.48 and for y-values: -5.14 to 35.78
• B)for x-values: -31.88 to 24.94 and for y-values: -18.78 to 22.14
• C)for x-values: -31.88 to 54.48 and for y-values: -18.78 to 35.78
• D)for x-values: -31.88 to 24.94 and for y-values: -5.14 to -15.98
• E)for x-values: -18.78 to 35.78 and for y-values: -31.88 to 54.48

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