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What is the volatility of a portfolio

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Question - 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 33 % probability that the firm will have a 28% return and a 67 % probability that the firm will have a -8% return. What is the volatility (standard deviation) of a portfolio that consists of an equal investment in:

a. 21 firms of type S?

b. 21 firms of type I?

Reference no: EM132246524

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