There Is a Probability of 25 Percent That the Economy

Multiple Choice

There is a probability of 25 percent that the economy will boom; otherwise,it will be normal.Stock Q is expected to return 18 percent in a boom and 9 percent otherwise.Stock R is expected to return 9 percent in a boom and 5 percent otherwise.What is the standard deviation of a portfolio that is invested 40 percent in Stock Q and 60 percent in Stock R?

A) .7 percent
B) 1.4 percent
C) 2.6 percent
D) 6.8 percent
E) 8.1 percent