The Rate of Return on the Common Stock of Flowers

Multiple Choice

The rate of return on the common stock of Flowers by Flo is expected to be 15 percent in a boom economy,7 percent in a normal economy,and only 3 percent in a recessionary economy.The probabilities of these economic states are 20 percent for a boom,70 percent for a normal economy,and 10 percent for a recession.What is the variance of the returns on this stock?

A) .001296
B) .001580
C) .001963
D) .002001
E) .002471