Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

4. Consider an economy with two types of firms, S and I. S firms all move together. I firms move indepen- dently. For both types

image text in transcribed

4. Consider an economy with two types of firms, S and I. S firms all move together. I firms move indepen- dently. For both types of firms, the distributions of return are the same as follows: Probability 10% 20% 30% 40% Return -20% -5% 1% 10% What is the volatility (standard deviation) of a portfolio that consists of an equal investment in 25 S firms? What about an equal investment in 25 I firms? A. S firms: 0.018, I firms: 0.018 B. S firms: 0.092, I firms: 0.092 C. S firms: 0.018, I firms: 0.092 D. S firms: 0.092, I firms: 0.018

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

How To Trade With High Probability

Authors: Ricardo Moneta

1st Edition

1542590159, 978-1542590150

More Books

Students also viewed these Finance questions