sider an economy with two types of firms, S and I. S firms all move together. I firms move independently. For both types of firms, there is a 64% probability that the firm will 5% return and a 36% probability that the firm will have a -2% return. What is the volatility (standard deviation) of a portfolio that consists of an equal investment in: O firms of type S? O firms of type I? C... What is the volatility (standard deviation) of a portfolio that consists of an equal investment in 40 firms of type S? ndard deviation is %. (Round to two decimal places.)
sider an economy with two types of firms, S and I. S firms all move together. I firms move independently. For both types of firms, there is a 64% probability that the firm will 5% return and a 36% probability that the firm will have a -2% return. What is the volatility (standard deviation) of a portfolio that consists of an equal investment in: O firms of type S? O firms of type I? C... What is the volatility (standard deviation) of a portfolio that consists of an equal investment in 40 firms of type S? ndard deviation is %. (Round to two decimal places.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Consider an economy with two types of firms, S and I. S firms all move together. I firms move independently. For both types of firms, there is a 64% probability that the firm will have
a 25% return and a 36% probability that the firm will have a -2% return. What is the volatility (standard deviation) of a portfolio that consists of an equal investment in:
a. 40 firms of type S?
b. 40 firms of type l?
a. What is the volatility (standard deviation) of a portfolio that consists of an equal investment in 40 firms of type S?
Standard deviation is%. (Round to two decimal places.)
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