If the Economy Is Normal, Charleston Freight Stock Is Expected

Multiple Choice

If the economy is normal, Charleston Freight stock is expected to return 15.7 percent. If the economy falls into a recession, the stock's return is projected at a negative 11.6 percent. The probability of a normal economy is 80 percent while the probability of a recession is 20 percent. What is the variance of the returns on this stock?

A) 0.010346
B) 0.011925
C) 0.013420
D) 0.013927
E) 0.014315