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johnpaech johnpaech
wrote...
Posts: 1098
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6 years ago
The standard deviation for the return on a portfolio of 20 type S firms is closest to:
A) 5.10%
B) 23.0%
C) 15.0%
D) 5.25%
Textbook 
Corporate Finance: The Core

Corporate Finance: The Core


Edition: 4th
Authors:
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Replies
wrote...
6 years ago
B
Explanation:  B) expected return = .7(20%) + .3(-30%) = 5%
standard deviation =   = .2291
Since all these firms move the same, there is no adjustment to the standard deviation.
johnpaech Author
wrote...
5 years ago
You took a load off my back, thanks for answering correctly
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