Use the Information for the Question(s) Below

question 59

Multiple Choice

Use the information for the question(s) below.
Consider an economy with two types of firms, S and U. S firms always move together, but U firms move independently of
each other. For both types of firms there is a 70% probability that the firm will have a 20% return and a 30% probability that
the firm will have a -30% return.
-The standard deviation for the return on an individual firm is closest to?

• A) 23.0%
• B) 15.0%
• C) 10.0%
• D) 5.25%

---

Definitions:

Net Income

The remaining profit for a company after subtracting total expenses, taxes, and costs from its total income.

Items Count

A measure or total of individual things or components.

Physical Inventory

The process of counting all physical goods and materials a company has in stock at a specific point in time.

Items Count

The process of tallying items in inventory, usually for the purpose of ensuring accuracy in stock levels and financial records.