Question

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 return for Vanguard Balanced Index (60% stock and 40% bond). For the past several years, we have the following data.

X: 28 0 20 14 20 35 24 -11 -17 -17
Y: 18 -4 13 14 28 17 27 -6 -7 -1

Required:
Compute:

Σx=....
Σx^2=....
Σy=
Σy^2=....

Answer 1

Answer:

Σx = 96

Σx² = 4280

Σy = 99

Σy² = 2593

Step-by-step explanation:

For this question, different values of x and corresponding values of y are provided.

X: 28 0 20 14 20 35 24 -11 -17 -17

Y: 18 -4 13 14 28 17 27 -6 -7 -1

X²: 784 0 400 196 400 1225 576 121 289 289

Y²: 324 16 169 196 784 289 729 36 49 1

Σx is the sum of all the variables given for x.

Σx = 28+0+20+14+35+24-11-17-17 = 96

Σx² is the sum of all the individual squares of each x-variable.

Σx² = 784+0+400+196+400+1225+576+121+289+289 = 4280

Σy is the sum of all the variables given for y.

Σy = 18-4+13+14+28+17+27-6-7-1 = 99

Σy² is the sum of all the individual squares of each y-variable.

Σy² = 324+16+169+196+784+289+729+36+49+1 = 2593

The attached image contains a spreadsheet of these variables, better shown, the squares, the sum, the sum of the squares and even a regression analysis is shown in the attached image.

Hope this Helps!!!