What Is the Variance of the Returns on a Portfolio

Multiple Choice

What is the variance of the returns on a portfolio that is invested 40 percent in Stock S and 60 percent in Stock T? $$\begin{array} { l c c } { \text { State of } } & \text { Probability of } & \text { Rate of Return } \\\text { Econony } & \text { State of Economy } & \text { if State Occurs } \\ & &\begin{array}{ll}\text { Stock S } & \text { Stock T }\end{array}\\\text { Boom } & .06& \begin{array}{ll}.22& \quad \quad .18\end{array} \\\text { Normal } & .92 & \begin{array}{ll}.15 & \quad \quad.14\end{array} \\\text { Bust } & .02&\begin{array}{ll}-.26 & \quad \quad -.09\end{array}\end{array}$$

A) .00107
B) .00091
C) .00118
D) .00136
E) .00083