Question
Consider an economy with two types offirms, S and I. S firms all move together. I firms move independently. For both types of firms there
Consider an economy with two types offirms, S and I. S firms all move together. I firms move independently. For both types of firms there is a 30% probability that the firm will have a 21% return and a 70% probability that the firm will have a 8% return. What is the volatility(standard deviation) of a portfolio that consists of an equal investmentin:
a. 35 firms of typeS?
b. 35 firms of typeI?
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Applied Equity Analysis and Portfolio Management Tools to Analyze and Manage Your Stock Portfolio
Authors: Robert A.Weigand
1st edition
978-111863091, 1118630912, 978-1118630914
