Use the Information for the Question(s)below

question 91

Multiple Choice

Use the information for the question(s) below.
Consider an economy with two types of firms,S and I.S firms always move together,but I firms move independently of each other.For both types of firm 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 a portfolio of 20 type S firms is closest to:

• A)5.10%.
• B)23.0%.
• C)15.0%.
• D)5.25%.

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Definitions:

Direct Order

A command issued by someone in authority that requires immediate compliance.

Indirect Order

A communication strategy where the main point or directive is not presented at the beginning but comes after the rationale or background information.

Adjustment

A change or modification made to correct, improve, or adapt something.

Basic Objective

Basic objective denotes a fundamental goal or purpose that an individual, group, or organization seeks to achieve.