A Portfolio Consists of 40 Percent of Stock S and 60

Multiple Choice

A portfolio consists of 40 percent of Stock S and 60 percent of Stock T.Stock S will return 13 percent if the economy booms and 8 percent if it is normal.Stock T will return 6 percent in a boom and 10 percent in a normal economy.The probability of a boom is 50 percent.What is the portfolio variance?

A) .001014
B) .000004
C) .000040
D) .001004
E) .000009