Firm a Sells Lemonade and Firm B Sells Hot Chocolate

question 8

Multiple Choice

Firm A sells lemonade and firm B sells hot chocolate.If you invest $100 if firm A, in one year you will get back $(30 + T) where T is the average temperature (Fahrenheit) during the summer.If you invest $100 in firm B, in one year you will get back $(150 - T) , where T is the average temperature during the summer.The expected value of T is 70 and the standard deviation of T is 10.If you invest $50 in firm A and $50 in firm B, what is the standard deviation of your return on your investment?

• A)10
• B)20
• C)5
• D)0
• E)None of the above.

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Definitions:

Corn Producers

Individuals or entities engaged in the cultivation and sale of corn.

Supply Curve

The supply curve is a graphical representation of the relationship between the price of a good or service and the quantity of it that producers are willing to supply, typically showing an upward slope, indicating that higher prices incentivize more supply.

Supply Curve

A graphical representation of the relationship between the price of a good and the quantity supplied, typically upwards sloping, indicating higher quantities supplied at higher prices.

Prices Rise

An economic condition where the cost of goods and services increases over time, affecting purchasing power.