Use the Information for the Question(s)below

question 3

Multiple Choice

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

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

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Definitions:

Lower Atmosphere

The part of the Earth's atmosphere closest to the surface, extending from the surface up to the tropopause, and is where most weather events occur.

Montreal Protocol

A global agreement aimed at safeguarding the ozone layer through the gradual elimination of several compounds that contribute to its depletion.

Ozone Destroyers

Chemicals, such as chlorofluorocarbons (CFCs), that break down ozone in the atmosphere.

UV Radiation

Ultraviolet radiation, a form of energy emitted by the sun and artificial sources, known for its ability to damage DNA and cause sunburn.