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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,

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

56% probability that the firm will have a 9% return and a 44% probability that the firm will have a 18% return. What is the volatility (standard deviation) of a portfolio that consists of an equal investment in:

a.36 firms of type S?

b. 36 firms of type I?image text in transcribed

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 56% probability that the firm will have a 9% return and a 44% probability that the firm will have a 18% return. What is the volatility (standard deviation) of a portfolio that consists of an equal investment in: a. 36 firms of type S ? b. 36 firms of type I? a. What is the volatility (standard deviation) of a portfolio that consists of an equal investment in 36 firms of type S? Standard deviation is %. (Round to two decimal places.) b. What is the volatility (standard deviation) of a portfolio that consists of an equal investment in 36 firms of type I? Standard deviation is \%. (Round to two decimal places.)

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