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:

Average Run Length

In statistical quality control, it is the average number of samples that must be taken before a change in the status of a process is detected.

Type I Error

The improper denial of a genuine null hypothesis, also identified as a "false positive."

Randomly Occurring

Events or phenomena that happen without a predictable pattern, order, or reason.

Production Process

A series of steps, operations, or stages designed to produce a product or achieve a specific outcome in a manufacturing or production environment.