Homework 3
Due 2/4
(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 $

where T is the average temperature during the summer. If you invest $100 in
firm B, in one year you will get back $

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?