Do Bonds Reduce the Overall Risk of an Investment Portfolio

question 6

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 the coefficient of variation for each fund. Round your answers to the nearest tenth. $$\begin{array} { l c c c c c c c c c c } x : & 12 & 0 & 38 & 23 & 34 & 25 & 26 & - 12 & - 12 & - 23 \\y : & 10 & - 5 & 28 & 15 & 24 & 16 & 15 & - 5 & - 6 & - 10\end{array}$$

• A)for x-values: , and for y-values: \(123.1 \%\) \(166.6 \%\)
• B)for x-values: , and for y-values: \(190.8 \%\) \(166.6 \%\)
• C)for x-values: , and for y-values: \[166.6 \%\] \(190.8 \%\)
• D)for x-values: , and for y-values: \(123.1 \%\) \(258.3 \%\)
• E)for x-values: , and for y-values: \(190.8 \%\) \(258.3 \%\)

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