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 firms there is a

70

%

probability that the firm will have a 20% return and a

30

%

probability that the firm will have a

minus

30%

return.

What is the expected return for an individual firm?

A.

negative 15

%

B.

negative 5

%

C.

5

%

D.

3

%