Stock S Is Expected to Return 12 Percent in a Boom

Multiple Choice

Stock S is expected to return 12 percent in a boom and 6 percent in a normal economy.Stock T is expected to return 20 percent in a boom and 4 percent in a normal economy.There is a probability of 40 percent that the economy will boom; otherwise,it will be normal.What is the portfolio variance if 30 percent of the portfolio is invested in Stock S and 70 percent is invested in Stock T?

A) .002220
B) .004056
C) .006224
D) .008080
E) .098000