You Are Comparing Stock a to Stock B A) 525 Percent
B) 1

Multiple Choice

You are comparing Stock A to Stock B. Given the following information, what is the difference in the expected returns of these two securities? $$\begin{array} { l c c } { \text { State of } } & \text { Probability of } & \text { Rate of Return } \\\text { Econony } & \text { State of Economy } & \text { if State Occurs } \\ & &\begin{array}{ll}\text { Stock A } & \text { Stock B }\end{array}\\\text { Normal } & .75 & \begin{array}{ll}.13 & \quad \quad .16\end{array} \\\text { Recession } & .25 &\begin{array}{ll} -05 & \quad \quad - . 21\end{array}\end{array}$$

A) 5.25 percent
B) 1.75 percent
C) 3.05 percent
D) 2.45 percent
E) 1.55 percent