Use the Information for the Question(s)below

question 25

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 S firms is closest to:

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

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Definitions:

Experimental Method

A research method that involves manipulating one variable to determine if changes in one variable cause changes in another variable.

Case Study

A detailed examination of a single subject (an individual or a small group), often used in clinical, social, or educational research to explore complex phenomena.

Dependent Variable

In experimental and observational studies, it is the outcome or factor that researchers aim to understand or predict based on changes in other variables.

Independent Variable

A variable in experimental research that is manipulated to determine its effect on a dependent variable.