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:

Disjoint Events

Events that cannot occur at the same time, meaning they have no outcomes in common.

P(S)

The Probability of success, used in statistics as a measure of how likely a particular event is to occur.

Discrete Random Variable

A type of random variable that can take on a countable number of distinct values, often representing categorical data.

Event A

A specific occurrence or situation that is designated with the label "A" for identification purposes.