Consider an economy with two types of firms, S and I. S firms all move together. I firms move independently. For both types of firms, there is a 20 % probability that the firm will have a 12 % return and an 80 % probability that the firm will have a negative 12 % return. What is the volatility (standard deviation) of a portfolio that consists of an equal investment in:

a. 40 firms of type S?

b. 40 firms of type I?