The president of the United States is considering two different candidates to chair the Federal Reserve. If he chooses Alan the probability that inflation
will be 2 percent is 0.4 and the probability that inflation will be 4 percent is 0.6. If the president chooses Ben the probability that inflation will be 2
percent is 0.6 and the probability that inflation will be 3 percent is 0.4. If you are an investor with your funds invested in bonds paying 7 percent
calculate the standard deviation of your real return if Alan is chosen to chair the Fed and if Ben is chosen to chair the Fed. Which candidate would you
prefer? Explain why. Show calcuations.