Florida Company (FC)and Minnesota Company (MC)are Both Service Companies

Multiple Choice

Florida Company (FC) and Minnesota Company (MC) are both service companies. Their stock returns for the past three years were as follows: FC: −5 percent, 15 percent, 20 percent; MC: 8 percent, 8 percent, 20 percent. What is the variance of a portfolio with 50 percent of the funds invested in FC and 50 percent in MC? (Ignore the correction for the loss of a degree of freedom set out in the text.)

A) 85.75
B) 111.50
C) 55.75
D) 57.17