Florida Company (FC) and Minnesota Company (MC) are both service companies. Their historical return for the past three years are: FC: - 5%, 15%, 20%; MC: 8%, 8%, 20%. What is the variance of the portfolio with 50% of the funds invested in FC and 50% in MC (approximately)?

A. 85.75

B. 111.50

C. 55.75

D. None of the above

Var(P) = (0.5^2)(175) + (0.5^2)(48) + (2)(0.5)(0.5)(60) = 85.75

The answer is A, but how did they get (175) and (48) and (60) within the solution at the bottom?