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Firm a Sells Lemonade and Firm B Sells Hot Chocolate

Question 8

Multiple Choice

Firm A sells lemonade and firm B sells hot chocolate.If you invest $100 if firm A, in one year you will get back $(30 + T) where T is the average temperature (Fahrenheit) during the summer.If you invest $100 in firm B, in one year you will get back $(150 - T) , 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?


A) 10
B) 20
C) 5
D) 0
E) None of the above.

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