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One of the major risks in the economy is the oil price. Many financial assets are severely affected by the ol price. Considera natural gas
One of the major risks in the economy is the oil price. Many financial assets are severely affected by the ol price. Considera natural gas company and an automobile company. The natural gas company will be hit by a low of price because the demand for natural gas will decrease as of becomes cheaper. But the automobile company will benefit from a low all price is more people can aford the cost of driving a car. The probability of the ol price next year is given by the following table oil price Probability drops 25% does not change 50% aris 25% Contingent on the change in the of price next year, the annual returns to the companies are expected as follows: If price Natural gas Automobile drops -0% 18% does not change ON 490 ar 1294 -10% You we planning to Wiveste of your investment in the natura pas company and the remaining in the automobile company. What is the variance of your porttoo! $300 1600 OC 152 Od 55 10.32
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