RTF Stock Is Expected to Return 11 Percent in a Normal

Multiple Choice

RTF stock is expected to return 11 percent in a normal economy and lose 15 percent in a recession.The probability of a recession is 33 percent and the probability of a booming economy is zero.What is the variance of the returns on RTF stock?

A) 0.019093
B) 0.013760
C) 0.017864
D) 0.014946
E) 0.019394