Use the Following Table How Large Is the Difference Between the Standard Deviation of |

question 5

Multiple Choice

Use the following table: $$\begin{array} { | l | c | c | c | c | } \hline \begin{array} { l } \text { States of the } \\\text { Economy }\end{array} & \begin{array} { c } \text { Probability of the } \\\text { State }\end{array} & \begin{array} { c } \text { 3-Month } \\\text { T-Bill }\end{array} & \begin{array} { c } \text { Large-Company } \\\text { Stock }\end{array} & \begin{array} { c } \text { Small-Company } \\\text { Stock }\end{array} \\\hline \text { Boom } & 0.3 & 4 & 10 & 30 \\\hline \text { Steady } & 0.5 & 4 & 5 & 20 \\\hline \text { Recession } & 0.2 & 4 & 0 & 10 \\\hline\end{array}$$ How large is the difference between the standard deviation of a small-company stock and a 3-month T-bill?

• A)7.0%
• B)5.5%
• C)4.0%
• D)3.5%

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