Use the Information for the Question(s)below

question 72

Essay

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.
-Is it accurate to state that as we add more shares of different firms to a portfolio, its risk is eliminated to zero?
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Definitions:

Checks

Written, dated, and signed instruments that direct a bank to pay a specific amount of money from the writer's account to the person or entity in whose name the check has been issued.

Bakers' Company

An organization or guild historically associated with bakers, often involved in regulating the baking trade.

Check Register

A record maintained by account holders to track checks written, deposits made, and current balances.

Deposit

A sum of money placed into an account or given to another party as a part of a financial transaction.