If the Economy Booms,RTF,Inc

Multiple Choice

If the economy booms,RTF,Inc. stock is expected to return 10%. If the economy goes into a recessionary period,then RTF is expected to only return 4%. The probability of a boom is 60% while the probability of a recession is 40%. What is the variance of the returns on RTF,Inc. stock?

A) .000200
B) .000760
C) .000864
D) .001594
E) .029394