45

Consider an economy with two pes of firmo. S and Stims always move together, but firmo move independently at each other. For both types of firms there is a 40% probability that the firm will have a 20% return and a 50% probability that the firm will have a - 30% return The standard deviation for the return on an individual tem is closest to A 24 49% OB - 10% OC 9.85 OD 1225