Homework 3

Due 2/4

  1. (10 points) Firm A sells lemonade and firm B sells hots chocolate. If you invest $100 in firm A, in one year you will get back $ MATH where T is the average temperature during the summer. If you invest $100 in firm B, in one year you will get back $ MATH where T is the average temperature during the summer. The expected value of T is 70 and the standard deviation of T is 10. If you invest %50 in firm A and $50 in firm B, what is the standard deviation of your return on your investment?

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