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 59% probability that the firm will have a 8% return and a 41% probability that the firm will have a 12% return. What is the volatility(standard deviation) of a portfolio that consists of an equal investmentin:
a. 37 firms of typeS?
b. 37 firms of typeI?
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Analysis for Financial Management
Authors: Robert C. Higgins
12th edition
1259918963, 9781260140729 , 978-1259918964
