Question: Investing: Stocks and Bonds. 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

for Vanguard Balanced Index (60% stock and 40% bond). For the past several

we have the following data (Reference: Morningstar Research Group, Chicago).

1. Compute \(\sum{x},\sum{{{x}^{2}}},\sum{y},\sum{{{y}^{2}}}\)
2. Use the results of part (a) to compute the sample mean, variance, and standard
   deviation for x and for y.
3. Compute a 75% Chebyshev interval around the mean for x values and also y values. Use the intervals to compare the two funds.
4. Compute the coefficient of variation for each fund. Use the coefficients of variation to compare the two funds. If s represents risks and \(\bar{x}\) represents expected return, then s/ \(\bar{x}\) can be thought of as a measure of risk per unit of expected return, In this case, why is a smaller CV better? Explain.

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