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 29% probability that the firm will have a 24% return and a 71% probability that the firm will have a -11% 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 1? 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.) b. What is the volatility (standard deviation) of a portfolio that consists of an equal investment in 40 firms of type I? Standard deviation is %. (Round to two decimal places.)
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 29% probability that the firm will have a 24% return and a 71% probability that the firm will have a -11% 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 1? 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.) b. What is the volatility (standard deviation) of a portfolio that consists of an equal investment in 40 firms of type I? Standard 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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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 29% probability that the firm will have a 24% return and
a 71% probability that the firm will have a -11% 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 I?
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.)
b. What is the volatility (standard deviation) of a portfolio that consists of an equal investment in 40 firms of type I?
Standard deviation is %. (Round to two decimal places.)
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