Kurt's Adventures, Inc

Multiple Choice

Kurt's Adventures, Inc. stock is quite cyclical. In a boom economy, the stock is expected to return 30% in comparison to 12% in a normal economy and a negative 20% in a recessionary period. The
Probability of a recession is 15%. There is a 30% chance of a boom economy. The remainder of the
Time the economy will be at normal levels. What is the standard deviation of the returns on Kurt's
Adventures, Inc. stock?

A) 10.05%
B) 12.60%
C) 15.83%
D) 17.46%
E) 25.04%