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%.

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Definitions:

Post-industrial Societies

Societies characterized by an economy in which the service sector produces more wealth than the industrial sector, emphasizing information technology and knowledge-based activities.

Knowledge-based Activities

Tasks or occupations that primarily involve the manipulation of information and knowledge, rather than physical labor or manual work.

Labour Market

Labour market refers to the supply of available workers in relation to available employment opportunities and is characterized by the interaction of employers and job seekers.

Comfortable Salaries

Earnings that provide individuals or families with a level of financial security that covers basic needs with additional disposable income for leisure or savings.