Posted by **Karen** on Tuesday, August 17, 2010 at 10:58pm.

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 .

x: 14 0 36 23 33 25 26 14 14 23

y: 6 5 26 17 24 17 17 5 6 6

4607

4803

5332

4243

4940

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