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Suppose there are two one-year assets. You cannot buy a fractional portion of either asset. Asset...

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Basic Math

Suppose there are two one-year assets. You cannot buy afractional portion of either asset. Asset A costs $100 to buy andin one year pays a total of either $120 or $90, with equalprobability. Asset B costs $200 to buy and in one year pays a totalof either $180 or $240. When Asset A pays $120, Asset B pays $180(and when Asset A pays $90, asset B Pays $240). You buy two ofAsset A and one of asset B. What is the standard deviation of therate of return on your investment? (Hint: define a new asset C = 2A+B). Express your answer in decimal form without a percent sign androunded and accurate to 4 decimal place.

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