The Rate of Return on the Shares of Flowers by Flo

Multiple Choice

The rate of return on the shares of Flowers by Flo is expected to be 14% in a boom economy, 8% in a normal economy, and only 2% in a recessionary economy.The probabilities of these economic
States are 20% for a boom, 70% for a normal economy, and 10% for a recession.What is the
Variance of the returns on the shares of Flowers by Flo?

A) .001044
B) .001280
C) .001863
D) .002001
E) .002471