Consider an economy with two types of firms s and i s firms, Ask an Expert

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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 38% probability that the firm will have a 8% return and a 62% probability that the firm will have a -17% return. What is the volatility (standard deviation) of a portfolio that consists of an equal investment in a. 18 firms of type S? b. 18 firms of type I?

a. What is the volatility (standard deviation) a portfolio that consists of an equal investment in 18 firms of type S? Standard deviation is % (Round to two decimal places.)

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