Use the Information for the Question(s)below

question 2

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 an individual firm is closest to:

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

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Definitions:

Conditional

A logical statement that has two parts: a hypothesis (if) and a conclusion (then), expressing a condition and its outcome.

Conjunct

A component in a conjunction, an operator in logic that combines two statements to form a single proposition that is true only when both statements are true.

Conjunction

A logical operator that connects two statements or propositions, both of which must be true for the combined statement to be true.

Tautology

A statement that is true by necessity or by virtue of its logical form, often repeating the same idea or statement using different words.