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 40% probability that the firm will have a 11% return and a 60% probability that the firm will have a −3% return. What is the volatility​ (standard deviation) of a portfolio that consists of an equal investment​ in: a. 23 firms of type​ S? b. 23 firms of type​ I?

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