RTF Stock Is Expected to Return 10

Multiple Choice

RTF stock is expected to return 10.6 percent if the economy booms and only 4.2 percent if the economy goes into a recessionary period.The probability of a boom is 55 percent while the probability of a recession is 45 percent.What is the standard deviation of the returns on RTF stock?

A) 4.03 percent
B) 2.97 percent
C) 3.18 percent
D) 3.69 percent
E) 5.27 percent