Consider a Portfolio That Consists of an Equal Investment in 20

question 26

Multiple Choice

Consider a portfolio that consists of an equal investment in 20 firms.For each of these firms,there is a 70% probability that the firms will have a 16% return and a 30% probability that they will have a -8% return.Each of these firms' returns is independent of all others.The standard deviation of this portfolio is closest to:

• A)2.5%.
• B)4.2%.
• C)8.8%.
• D)11.0%.

---

Definitions:

Temporarily Deaf

A temporary loss of hearing, which can be caused by various factors such as exposure to loud noise, infections, or blockages.

Hypnotized

A state of highly focused attention or concentration, often associated with relaxation and heightened suggestibility.

Anesthesia

A medical procedure involving the administration of drugs to temporarily eliminate sensation, typically to allow surgical procedures to be performed without pain.

Early Childhood

A period in human development generally ranging from birth to eight years old, during which the foundations of physical, emotional, and intellectual growth are laid.