Consider a Portfolio That Consists of an Equal Investment in 20

question 93

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% that they will have a - 8% return.Each of these firms returns are independent of each other.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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