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: 11 0 36 24 35 26 27 –11 –11 –24
y: 9 –4 28 14 25 17 14 –4 –5 –9
2 answers